Objective: The purpose of this study was to investigate the importance of cognitive performance in determining functional gain in geriatric patients with hip fractures following rehabilitation. Methods: From April 2002 to March 2003, we retrospectively studied 218 geriatric patients (age > 65 years) with hip fractures. Cognitive performance was assessed using the Mini-Mental State Examination (MMSE). All admitted patients were given training in activities of daily living (ADL), which was the core component during rehabilitation. The Functional Independence Measure (FIM) was used to assess patients' functional performance both on admission and discharge, and functional gain was determined by the change in FIM score between admission and discharge. Results: Functional gain after rehabilitation differed significantly from the baseline (p < 0.01). Significant correlation was noted between patients' cognitive performance as measured by the MMSE and discharge functional performance as measured by the FIM (r = 0.85, p < 0.01). Conclusion: This study showed positive association between cognitive status at admission and functional gain after rehabilitation. While all patients had functional improvement during rehabilitation, impaired mental function at admission inevitably affected patients' potential to learn, making functional training more difficult. Cognitively intact patients had better functional outcomes than cognitively impaired patients. Patients with intact mental function benefit most from intensive rehabilitation training.