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Objectives: Trajectory of intrinsic capacity (IC) can be non-linear and discontinuous, which traditional linear models may not be able to handle. This study thus aimed to model the trajectory of IC as transitions between different IC states and examine their associated factors. Methods: Longitudinal data from a sample of community-dwelling older people aged 60 years or above (n = 1,588) was analysed. A set of 14 self-reported items representing different domains of IC were administered annually to measure IC at four time points. Based on the number of impaired IC domains (i.e., cognitive, locomotor, vitality, sensory, and psychological), participants at each time point were classified into one of three IC states, namely state 1 (0 impaired domain), state 2 (1–2 impaired domains), and state 3 (3–5 impaired domains). Multistate modelling was used to identify factors associated with the transitions from one state to another. Results: The mean age of participants was 75.0 years, and 77.4% of them were female. At baseline, 12.4% were in state 1, 51.8% were in state 2, and 35.8% were in state 3. 62.8% of participants experienced at least one transition between states, among which 12% experienced a transition every year. The transitions occurred mostly between adjacent IC states and could take place back and forth. Age, sex, marital status, perceived financial adequacy, number of chronic diseases, and self-rated health were the factors associated with the transitions. Conclusion: Findings may serve as a valuable reference for guiding future policies to optimize IC and promote healthy ageing using a person-centred approach.