This study examined the association between pain characteristics and the incidence of functional disability among community-dwelling older adults. This prospective cohort study included 4,365 older adults (mean age 74.7 years, 53.5% female) living in community settings. Pain characteristics, including severity and duration of pain, were assessed in participants who also underwent monthly follow-up assessment of functional disability for 24 months based on the national long-term care insurance system. Among the 4,365 participants, 2,149 (48.7%) reported pain, regardless of severity and duration. Of the 2,149 participants with pain, 950 (44.2%) reported moderate to severe pain and 1,680 (78.2%) reported chronic pain. Based on the univariate analyses, participants with moderate (hazard ratio [95% confidence interval]: 1.48 [1.05-2.09]) or severe (2.84 [1.89-4.27]) pain and chronic pain (1.50 [1.15-1.95]) showed significantly higher risk of disability incidence than did those without pain. After adjusting for covariates, severe pain remained a significant predictor (hazard ratio [95% confidence interval]: 1.66 [1.05-2.62]), but moderate (1.00 [0.69-1.47]) and chronic pain (1.04 [0.77-1.40]) did not. Our results established that moderate to severe pain or chronic pain affects functional disability; in particular, severe pain was independently associated with the incidence of disability. Subjective complaints of pain do not always correspond to physical causes; however, simplified questions regarding pain characteristics could be useful predictors of functional disability in community-dwelling older people.