BACKGROUND: This study's aim is to compare the correlates of instrumental and physical activities of daily living (ADL) according to the presence or absence of dementia in an elder populated community. METHODS: This study was part of a community survey of late-life psychiatric morbidity carried out in Kwangju, South Korea in 2001. The Instrumental Activities of Daily Living Scale was administered to 740-community residents aged 65 or over. Data on the demographic characteristics (age, gender, living area, marital state, and religion), socio-economic state (education, monthly income, number of rooms, previous occupation, current employment, and social network), and clinical characteristics (cognitive function, physical illness, and depression) were gathered. RESULTS: The instrumental ADL impairment was associated significantly with higher age and lower cognitive functional ability in both groups. However, the impairment was shown in those without dementia, currently unemployed and had no spouse. The physical ADL impairment was significantly associated with lower cognitive function and higher number of physical illnesses in those with dementia, while it was significantly associated with higher age and severe depressive symptoms in those without dementia. The accountability portion of the above correlates for the variances of the instrumental and physical ADL was high in those with dementia, but was unacceptably low in those without dementia. CONCLUSIONS: It was suggested that the correlates and utility of ADL scale might vary according to dementia state.