Race- and poverty-related disparities in physical function are well documented, though little is known about effects of race and poverty on functional decline and the progression of disability. We examined cross-sectional and longitudinal relationships between race, poverty and lower extremity function using data from moderately to severely disabled women in the U.S. Women's Health and Aging Study. Severity of lower extremity functional limitation was determined from scaled responses of reported difficulty walking (1/4) mile, walking across a room, climbing stairs, and stooping, crouching or kneeling. Usual walking speed assessed over 4m was our objective measure of function. Of the 996 women who described themselves as black or white, 284 (29%) were black and 367 (37%) were living at or below 100% of the federal poverty level. Independent of demographic and health-related factors, among white women, the poor exhibited consistently worse lower extremity function than the non-poor; this association, however, was not observed in black women. Among the non-poor, black women had slower walking speeds, and reported more limitation in lower extremity function than their non-poor white counterparts, even after adjusting for demographic variables and health-related characteristics. After 3 years, accounting for baseline function, demographic and health-related factors, race and poverty status were unrelated to functional decline. Thus, while race and poverty status were associated with functional deficits in old age, they do not appear to impact the rate of functional decline or progression of disability over 3 years.