Background Functional decline and activity limitation are important indicators of health status among older adults and are associated with reduced independence, poorer quality of life, and increased healthcare utilization. Identifying factors that contribute to these outcomes is essential for developing interventions that promote healthy ageing. This study aimed to determine the predictors of functional decline and activity limitation among community-dwelling older adults in Enugu, Nigeria.Methods A community-based cross-sectional study was conducted among 119 adults aged 60 years and above residing in Uwani, Enugu South Local Government Area. Data were collected using structured questionnaires assessing pain severity, fall history, fear of falling, vision impairment, hearing impairment, cognitive status, and depression. Functional capacity was assessed using the Katz Index of Independence in Activities of Daily Living, while activity limitation was assessed using the Global Activity Limitation Index. Descriptive statistics were used to summarize participants’ characteristics. Binary logistic regression analysis was performed to identify predictors of functional decline and activity limitation. Statistical significance was set at p < 0.05.Results Nearly half of the participants (49.6%) reported activity limitation, while only 1.6% demonstrated functional decline based on the Katz Index. Logistic regression analysis showed that pain, fall history, and fear of falling were significant predictors of activity limitation (p < 0.05). Participants experiencing pain, those with a history of falls, and those reporting fear of falling were more likely to report limitations in daily activities. However, none of the examined variables significantly predicted functional decline, likely due to the very low prevalence of functional decline in the study population.Conclusion Activity limitation was common among older adults in this community despite the relatively low prevalence of functional decline in basic activities of daily living. Pain, fall history, and fear of falling were key predictors of activity limitation. Interventions aimed at improving pain management and preventing falls may help maintain mobility and independence among older adults. Further longitudinal studies with larger sample sizes are recommended to better understand the determinants of functional decline in this population.