OBJECTIVE: Health-related quality of life (HRQOLs) are important health-status indicators. The longitudinal aspect of transitions in HRQOL is not well known. This study examines how HRQOL changes over time using a Markov probability model. METHOD: We analyzed 10,492 elderly persons aged 65 years or older and followed from 1991 to 1994 in MCBS, a nationally representative sample of the US elderly population. We measured HRQOL by global health perception, Katz Index of Activities of Daily Living (ADL), and Instrumental Activities of Daily Living (IADL). We estimated the probability of transition from one state of HRQOL to the another using a Markov probability model. We investigated the transition matrix of HRQOL by incorporating the competing risk of death and socio-demographic variables including age, race, gender and the interaction terms among them. RESULTS: Including death as a worst outcome, 1411 persons (13%) had a steady deterioration in global health perception in the four-year time period. One thousand one hundred six (1106) (11%) had steady improvement of health perception, 1047(10%) had a constant state, and 6928 (66%) experienced fluctuations in health perception. Similar patterns were found in ADL and IADL measures. The transition probabilities for a female with a base age of 70 indicated that one had 34% to 44% chance of remaining in the same state of general health, while the probability steadily decreases as the health perception decreases. A male aged 70 years has a probability of 32% to 53% to remain at the same state. As HRQOL decreases by one unit, the probability of death increases steadily from less than 1% to 12% for a female and from 5% to 21% for a male across all HRQOL measures. CONCLUSION: The study shows the patterns in transition of HRQOL in the elderly population. The probabilities of transition in three measures of HRQOL are generally consistent and interpretable.