OBJECTIVES: A discrepancy in self-reported and performance-based physical functioning levels is often observed among older adults. We investigated the association of discrepancy in self-reported and performance-based physical functioning levels with risk of future falls among community-dwelling older adults. DESIGN: Prospective cohort study. SETTING: Two communities in Fukushima Prefecture, Japan. PARTICIPANTS: 1379 older adults who took part in the yearly health checkup in both 2009 and 2010. MEASURES: The performance-based and self-reported physical functioning levels were evaluated by the Timed Up and Go test and the Short-Form 12 Health Survey (Japanese version) physical functioning subscale, respectively. We divided the participants into 4 groups based on the combinations of low or high performance-based and self-reported physical functioning groups, which were classified by age- and sex-specific reference values. The main outcome was the occurrence of any falls within the 1-year follow-up period, assessed using a self-reported questionnaire. RESULTS: A total of 22% of the participants reported the occurrence of a fall during the follow-up period. In multivariable logistic regression analysis, the adjusted odds ratios of the high self-reported and low performance-based, low self-reported and high performance-based, and low self-reported and low performance-based physical functioning groups were 1.10 (95% confidence interval [CI], 0.67-1.82), 1.76 (95% CI, 1.17-2.66), and 1.80 (95% CI, 1.11-2.90), respectively, compared with the high self-reported and high performance-based physical functioning group. CONCLUSIONS: Our findings suggest that the discrepancy as high performance-based but low self-reported physical functioning level is associated with an increased risk of future falls in older adults aged 65-89 years. Clinicians should carefully assess older adults whose subjective perception of their physical functioning capacity is lower than those in similar age and sex groups, even if their actual physical functioning appears to be objectively high.