This study aims to examine the relationship between neighborhood characteristics and the functional performance of elderly people living in the Belo Horizonte metropolitan area, Minas Gerais State, Brazil. Data of a representative sample of 2,033 elderly were analyzed using quantile regression. Functional performance was measured by the number of activities of daily living (ADL) the elderly had difficulty to perform. The neighborhood characteristics evaluated were: maintenance, trust, insecurity and defective sidewalks. Functional performance was found positively associated with the characteristic defective sidewalks, whose effect increased as the number of ADL the elderly had difficulty to perform increased. The results suggest that inadequate sidewalk conditions can contribute to functional losses in elderly people, especially among those who are functionally more compromised.