To assess the associations between TSH and free thyroxine (FT4) levels and decline in functional status in euthyroid older patients at risk of frailty. Longitudinal prospective study. Participants from the geriatric outpatient clinic of a university hospital, who fulfilled the criteria for frailty or were at risk of frailty, were recruited. Only those euthyroid, defined by age-specific reference range of TSH, were included. Serum was collected during enrollment and at the third and sixth years of follow-up to assess the mean value of all follow-up levels of serum TSH and FT4. Functional status assessing activities of daily living (ADL) and instrumental ADL were evaluated using the Katz Index and the Health Assessment Questionnaire, respectively. Functional decline was defined by a positive variation in any of the applied scales in the absence of disagreement between the scales or if the patient was institutionalized. Of the 273 participants (72.5% females) enrolled (mean age 80 years old), 48 died and 102 presented functional decline at the end of follow-up (mean 3.6 ± 1.7 years). Each 0.1 ng/dL increase in baseline and mean follow-up serum FT4 levels increased the risk of functional decline by 14.1% and 7.7%, respectively. The risk of functional decline was 9 times greater with baseline FT4 levels in the fourth and fifth quintiles (p = 0.049) and 50% lower with baseline FT4 levels in the first quintile (p = 0.046). No association between TSH and the outcome was found. Higher and lower FT4 levels were, respectively, a risk and a protective factor for the decline in functional status in a cohort of euthyroid older adults at risk of frailty.