A random sample of nursing home residents over 65 years of age were interviewed. Two hundred ninety-two participants received the Short Portable Mental Status Questionnaire. Two hundred eleven were unable to answer the questionnaire, but their caregivers provided information about their daily activities and performance ability. We found that 255 (50.9%) fit our criteria of cognitive impairment and 236 (47.7%) had both impaired cognition and impaired performance in activities of daily living. Similar to statistics in the US, the prevalence of cognitive impairment in Taipei nursing home residents was much higher than that observed in the community elderly and probably in Taiwan as well. Therefore, public health care policy for cognitively impaired elderly in Taiwan should not simply rely on data from community studies.