OBJECTIVES: Cumulative literature has overwhelmingly suggested that income is positively associated with health. This study aims to identify the domains of health with which income is positively as well as negatively associated, using an elderly sample in a typical transitional economy, Hong Kong. METHODS: Stratified disproportional random sampling in 1991-92 assembled a cohort of 2032 elderly subjects who were aged 70 and above. We measured the association between income and different domains of health and resource utilization using bivariate and multivariate regression analyses. RESULTS: After adjusting for age, sex, marital and employment status, higher income was associated with better general health (p=0.03), better cognitive function (p <0.0001), lower geriatric depression scale (p <0.0001), better quality of sleep (p=0.01) and fewer visits to general practitioners (p=0.01). Higher income was also associated with higher Body Mass Index (p=0.07), presence of cerebrovascular disease (p=0.04), fractures (p=0.03) and more deficiencies in Activities of Daily Living (p <0.01). CONCLUSIONS: Income was positively as well as negatively associated with health in Hong Kong. Other transitional economies in the region may experience the same pattern during rapid economic growth.