BACKGROUND AND OBJECTIVE: Measuring physical functioning (PF) within and across postacute settings is critical for monitoring outcomes of rehabilitation; however, most current instruments lack sufficient breadth and feasibility for widespread use. Computer adaptive testing (CAT), in which item selection is tailored to the individual patient, holds promise for reducing response burden, yet maintaining measurement precision. We calibrated a PF item bank via item response theory (IRT), administered items with a post hoc CAT design, and determined whether CAT would improve accuracy and precision of score estimates over random item selection. METHODS: 1,041 adults were interviewed during postacute care rehabilitation episodes in either hospital or community settings. Responses for 124 PF items were calibrated using IRT methods to create a PF item bank. We examined the accuracy and precision of CAT-based scores compared to a random selection of items. RESULTS: CAT-based scores had higher correlations with the IRT-criterion scores, especially with short tests, and resulted in narrower confidence intervals than scores based on a random selection of items; gains, as expected, were especially large for low and high performing adults. CONCLUSION: The CAT design may have important precision and efficiency advantages for point-of-care functional assessment in rehabilitation practice settings.