OBJECTIVE To determine whether there is a difference in the quality of life between elderly patients managed in a day hospital and those receiving conventional care. METHODS Randomized controlled trial; assessment upon entry to study and at 3, 6 and 12 months afterward. METHODS Geriatrician referral-based secondary care. METHODS A total of 113 consecutively referred elderly patients with deteriorating functional status believed to have rehabilitation potential; 55 were assessed and treated by an interdisciplinary team in a day hospital (treatment group), and 58 were assessed in an inpatient unit or an outpatient clinic or were discharged early with appropriate community services (control group). METHODS Barthel Index, Rand Questionnaire, Global Health Question and Geriatric Quality of Life Questionnaire (GQLQ). RESULTS Eight study subjects and four control subjects died; the difference was insignificant. Functional status deteriorated over time in the two groups; although the difference was not significant there was less deterioration in the control group. The GQLQ scores indicated no significant difference between the two groups in the ability to perform daily living activities and in the alleviation of symptoms over time but did show a trend favouring the control group. The GQLQ scores did indicate a significant difference in favour of the control group in the effect of treatment on emotions (p = 0.009). CONCLUSIONS The care received at the day hospital did not improve functional status or quality of life of elderly patients as compared with the otherwise excellent geriatric outpatient care.