Despite the importance and complexity of evaluating decision-making capacity at the end of life, little research has focused on terminally ill patients' decision-making ability. The purpose of this study was to explore the decision-making capacity of elderly, terminally ill patients and the psychological and physical factors that affect decision making. Decision-making capacity and cognitive abilities were assessed using four measures: the Hopkins Competency Assessment Kit, the Bechara Gambling Task, the Concept Assessment Kit, and the Mini Mental Status Exam. In addition, symptoms of depression, level of physical functioning, and extent of physical symptoms were evaluated in order to identify correlates of decision-making ability. Two samples were compared: elderly, terminally ill patients with cancer (n = 43) and elderly, physically healthy adults living in supportive community residence (n = 35). Results revealed significantly poorer decision-making abilities among the terminal ill sample compared with healthy comparisons, but no association between demographic variables (e.g., age, race, or education) or clinical variables (depression or physical symptoms) and decision making. Implications for evaluating decision-making capacity are addressed. Copyright © 2007 John Wiley & Sons, Ltd.