Objective: This study investigated the variability in activities of daily living (ADL) trajectories among 6,155 nursing home residents using unique and rich observational data. Method: The impairment in ADL performance was considered as a dynamic process in a multi-state framework. Using an innovative mixture model, such states were not defined a priori but inferred from the data. Results: The process of change in functional health differed among residents. We identified four latent regimes: stability or slight deterioration, relevant change, variability, and recovery. Impaired body functions and poor physical performance were main risk factors associated with degradation in functional health. Discussion: The evolution of disability in later life is not completely gradual or homogeneous. Steep deterioration in functional health can be followed by periods of stability or even recovery. The current condition can be used to successfully predict the evolution of ADL allowing to set and target different care priorities and practices.