A cross-sectional study was undertaken in Lilongwe, Malawi to ascertain the levels of malnutrition and functional impairment among older people, examine the relationship between nutritional status and function ability and identify risk factors for poor nutritional status. Selected anthropometric measurements were taken and nutritional indices were derived using standard equations. Functional ability was assessed by questionnaire (activities of daily living [ADLs]) and tests which assess manual dexterity, handgrip strength and psychomotor function. Respondents were interviewed using a pre-tested questionnaire and a basic clinical examination was conducted. A total of 296 respondents (97 males, 199 females) aged from 55 to 94 years were studied. Men were significantly heavier and taller than women but had smaller mid-upper arm circumferences and triceps skinfolds than women. Prevalence of undernutrition defined as body mass index (BMI) <18.5 kg/m2, was 33.7% among males and 27.7% among females. Over 90% of all respondents were independent in ADLs and men were generally stronger and faster than women in performing functional tests except for psychomotor function. Functional ability declined significantly with age in both sexes except for manual dexterity among women. Handgrip strength emerged as the most important predictor of BMI, contributing to 15.8% and 11.6% of the variation in BMI of males and females, respectively. Low BMI was associated with poor handgrip strength, a history of smoking, fear of dependence and disability, poverty and living alone among males and among females, it was associated with poor handgrip strength, reduced food intake during the pre-harvest season and a history of anaemia. The study has demonstrated for the first time that undernutrition is a significant problem among older people in Malawi. It also confirms that poor nutritional status is associated with poor functional ability (as assessed by handgrip strength), and that it is possible to identify risk factors of nutritional vulnerability in this population. The study highlights the need to incorporate older people into existing and future nutrition and health programmes.