Background Hospitalisation is associated with adverse health outcomes including loss of muscle strength, muscle mass and functional decline, which might be further aggravated by acute inflammation. This study aimed to determine whether acute inflammation, as denoted by C-reactive protein (CRP), is associated with muscle strength, muscle mass and functional dependency in hospitalised older patients. Methods The observational, prospective EMPOWER study included 378 hospitalised patients aged 70 years and older. As part of the hospital assessment, 191 patients (50.5%) had CRP measured. Muscle strength and mass were measured using handheld dynamometry and bioelectrical impedance analysis respectively. Activities of Daily Living (ADL) were assessed using Katz score and Instrumental ADL (IADL) by Lawton and Brody score. Linear regression analyses and logistic regression analyses were performed stratified by sex and adjusted for age and comorbidities. Results Mean age was 79.7 years (SD 6.4) and 50.8% were males. On admission and discharge, males with elevated CRP had significantly lower handgrip strength and lower absolute muscle mass compared with males with normal CRP and those with no CRP measured. At three months post-discharge, males with elevated CRP were more likely to be ADL dependent than those with normal CRP and with no CRP measured. In females, no associations were found between CRP and muscle strength, muscle mass, ADL or IADL. Conclusions Hospitalised older male patients with acute inflammation had lower muscle strength at admission and discharge and lower absolute muscle mass at admission and higher ADL dependency at three months post-discharge.