This study aimed to identify the main regional factors associated with variations in the prevalence of functional limitation on the older adult in Colombia adjusted by individual characteristics. This multilevel study used cross-sectional data from 23,694 adults over 60 years of age in the SABE, Colombia nationwide survey. State-level factors (poverty, development, inequity, violence, health coverage, and access to improved water sources), as well as individual health related, socioeconomic and demographic characteristics, were analyzed. The overall prevalence of functional impairment for the basic activities of daily living (ADL) was 22%. The presence of comorbidities, low educational level, physical inactivity, no participation in social groups, mistreatment and being over 75 years old were associated with functional limitation. At the group level, the analysis showed significant differences in the functional limitation prevalence across states, particularly regarding the socioeconomic status measured according to the Human Development Index (median OR = 1.22; 95%CI: 1.13-1.30; p = 0.011). This study provides evidence on the impact of socioeconomic variation across states on FL prevalence in the Colombian elderly once adjusted for individual characteristics. The findings of this study, through a multilevel approach methodology, provide information to effectively address the conditions that affect the functionality in this population through the identification and prioritization of public health care in groups with economic and health vulnerability.