This paper examines the psychosocial dimensions of long-term care with reference to the new International Classification of Functioning, Disability and Handicap (ICIDH 2) and to research conducted in Hong Kong. It also draws on selected international literature about older people. It discusses the different ways in which information can be gained about the personal, social and emotional processes of rehabilitation that influence outcomes and raises methodological questions about the study of interventions. Outcomes that are sensitive to psychosocial interventions and that take account of the elderly person's own perspective are identified as important challenges for nurses and other professionals in the multidisciplinary team, in order to respond to an individualized approach to long-term care. It is concluded that gaining a better understanding of the psychosocial dimensions of long-term care will enhance professional practice and benefit older people and their carers.