STUDY OBJECTIVE: To identify socioeconomic differentials in quality of life among older people and their explanatory factors. DESIGN: Baseline data from a cluster randomised controlled trial of the assessment and management of older people in primary care. Outcome measures were being in the worst quintile of scores for, respectively, the Philadelphia geriatric morale scale and four dimensions of functioning from the sickness impact profile (home management, mobility, self care, and social interaction). SETTING: 23 general practices in Britain. PARTICIPANTS: People aged 75 years and over on GP registers at the time of recruitment, excluding those in nursing homes or terminally ill. Of 9547 people eligible, 90% provided full information on quality of life and 6298 also did a brief assessment. RESULTS: The excess risk of poor quality of life for independent people renting rather than owning their home ranged from 27% for morale (95% CI 9% to 48%) to 62% for self care (95% CI 35% to 94%). Self reported health problems plus smoking and alcohol consumption accounted for half or more of the excess, depending on the outcome. Having a low socioeconomic position in middle age as well as in old age exacerbated the risks of poor outcomes. Among people living with someone other than spouse the excess risk from renting ranged from 24% (95% CI -10% to 70%) for poor home management to 93% (95% CI 30% to 180%) for poor morale. CONCLUSIONS: Older people retain the legacy of past socioeconomic position and are subject to current socioeconomic influences.