There is increasing consensus regarding the importance of operationally defining and measuring functional decline in mild cognitive impairment (MCI). However, few studies have directly examined functional abilities in MCI or its presumed subtypes and, to date, reported findings have been discrepant. Nondemented older adults (n = 120) were administered a comprehensive cognitive battery measuring multiple domains as well as a performance-based functional ability measure. Participants were characterized as either cognitively normal, amnestic MCI, or non-amnestic MCI. MCI individuals demonstrated decrements in instrumental activities of daily living (IADL) relative to their cognitively normal counterparts. Specifically, participants with amnestic MCI demonstrated significant decrements in financial management, whereas those with non-amnestic MCI showed poorer performance in abilities related to health and safety. Moreover, decreased functional abilities were associated with decrements in global cognitive functioning but not memory or executive functions in the MCI participants. Finally, logistic regression demonstrated that functional abilities accurately predicted MCI subtype. Results support the need for better delineation of functional decline in MCI. Given the implications of functional status for MCI diagnosis and treatment, the direct assessment of functional abilities is recommended. Results further suggest performance-based IADL assessment may have utility in distinguishing MCI subtypes. (JINS, 2010, 16, 630–639.)