Background Data on trends for disability in instrumental activity of daily living (IADL) are sparse in older Chinese adults. Objectives To assess trends in prevalence and incidence of IADL disability among older Chinese adults and to explore contributing factors. Design Population based study. Setting 15 provinces and municipalities in China. Subjects Participants (age >= 60) were from four waves of the China Health and Nutrition Survey, conducted in 1997 (n=1533), 2000 (n=1581), 2004 (n=2028) and 2006 (n=2256), and from two cohorts constructed within the national survey: cohort 1997-2004 (n=712) and cohort 2000-2006 (n=823). Measurements IADL disability was defined as inability to perform one or more of the following: shopping, cooking, using transportation, financing and telephoning. Data were analysed with logistic regression and generalised estimating equation models. Results The prevalence of IADL disability significantly decreased from 1997 to 2006 in the total sample and in all of the subgroups by age, sex, living region and IADL items (all p(trend) <0.05). The incidence of IADL disability remained stable from cohort 1997-2004 to cohort 2000-2006 in the total sample and in all of the subgroups (all p>0.10). The recovery rate from IADL disability significantly increased over time in those aged 60-69 years (p=0.03). Living in a rural area or access to local clinics for healthcare was less disabling over time (p(trend) <0.02). Conclusions The prevalence of IADL disability decreased among older Chinese adults during 1997-2006, whereas the incidence remained stable. The declining prevalence of IADL disability might be partly due to the decreased duration of IADL disability, and to improvements in living conditions and healthcare facilities over time.