OBJECTIVE To quantify and characterize the chronic conditions of older Americans who live in nursing homes (NHs) but have minimal disability and might be able to live in less restrictive and less expensive settings. METHODS Secondary analysis of the 1999 National Nursing Home Survey. METHODS NH staff members familiar with the care of residents who were 65 years or older and had resided in the NH for more than 100 days. METHODS We defined "higher-functioning" residents as those who received help from NH staff in 0-2 activities of daily living. We then classified these higher-functioning residents according to their conditions requiring chronic care: impaired mobility, conditions requiring rehabilitation, mental health disorders, incontinence, severe sensory impairment, and medical conditions (congestive heart failure, chronic obstructive pulmonary disease, diabetes mellitus, Parkinson's disease). RESULTS One-fifth (19.8%) of the NH residents met the criteria for "higher-functioning" (n=1145). Of these, 64.1% had mental disorders, 40.4% had impaired mobility, 20.6% were incontinent, 18% had conditions requiring rehabilitative therapy, 8.7% had severe sensory impairment, and 43.0% had one or more of the four medical diagnoses. CONCLUSIONS Many higher-functioning long-stay nursing home residents have chronic care needs that are similar to those of older adults who live in private residences. Many such persons may be able to live in community settings.