Hip fracture is prevalent among older adults impacting on all aspects of daily life. The gaols of this study were: (a) Examine the trajectory of activities of daily living (ADL)/instrumental activities of daily living (IADL) functioning and participation among older adults with hip fracture from prefracture to 6-months postrehabilitation; (b) determine the relationship between health-related quality of life (HRQoL), functional abilities, and participation 6-months postrehabilitation; and (c) examine whether functional outcomes can predict HRQoL. Both retrospective and prospective data were analyzed. Fifty-five participants (Mean age = 80.82) completed the motor component of the functional independence measure (mFIM), IADL questionnaire, Activity Card Sort, and SF-12. Prefracture levels of function and participation were not attained. Significant correlations were found between HRQoL, functional abilities, and participation. ADL functioning and mobility predicted Physical SF-12, whereas social-cultural activity predicted Mental SF-12. Significant loss of functioning and participation was found, persisting 6 months after rehabilitation that impede their HRQoL. Improving functioning, mobility, and social participation can be achieved by occupational therapy intervention for promoting HRQoL among elderly with hip fracture.