Context: Physical performance in response to exercise appears to be influenced by the angiotensin-converting enzyme (ACE) insertion (I)/deletion (D) genotype in young adults, but whether this relationship could help explain variation in older individuals' response to exercise has not been well studied. Objective: To determine whether the ACE genotype interacts with significant physical activity to affect the incidence of mobility limitation in well-functioning older adults. Design, Setting, and Participants: The Health Aging and Body Composition (Health ABC) Cohort Study, conducted in the metropolitan areas of Memphis, Tenn, and Pittsburgh, Pa. A total of 3075 well-functioning community-dwelling adults aged 70 through 79 years were enrolled from 1997 to 1998 and had a mean of 4.1 years of follow-up. Main Outcome Measure: Incident mobility limitation defined as the report of difficulty walking a quarter of a mile (0.4 km) or walking up 10 steps on 2 consecutive semiannual interviews (n=1204). Results: Physically active participants (those reporting expending ≥1000 kcal/wk in exercise, walking, and stair climbing) were less likely to develop mobility limitation regardless of genotype. However, activity level interacted significantly with the ACE genotype (P=.002). In the inactive group, the ACE genotype was not associated with limitation (P=.46). In the active group, those with the II genotype were more likely to develop mobility limitation after adjusting for potential confounders compared with those with ID/DD genotypes (adjusted rate ratio, 1.45, 95% confidence interval, 1.08-1.94). The gene association was especially strong among participants reporting weightlifting. Exploration of possible physiological correlates revealed that among active participants, those with the II genotype had higher percentage of body fat (P=.02) and more intermuscular thigh fat (P=.02) but had similar quadriceps strength as those with ID/DD. Conclusions: Among older individuals who exercised, those with the ACE DD or ID genotypes were less likely to develop mobility limitation than those with the II genotype. Regardless of genotype, individuals who exercised were less likely to develop mobility limitation than those who did not exercise.