The aim of this study was to describe risk factors for delirium and the impact of delirium on the rehabilitation outcome for patients operated for femoral neck fractures. Sixty-one patients, aged 70 years or older, consecutively admitted to the Department of Orthopaedic Surgery at Umeå University Hospital, Sweden for femoral neck fractures were assessed and interviewed during hospitalization and at follow up 4 months after surgery. Delirium occurred in 38 (62%) patients and those who developed delirium were more often demented and/or depressed. Patients with delirium were longer hospitalized and they were more dependent in their activity of daily living (ADL) on discharge and after 4 months. They had poorer psychological well-being and more medical complications than the nondelirious. A large proportion of the patients who developed delirium did not regain their previous walking ability and could not return to their prefracture living accommodation. Delirium after hip fracture surgery is very common especially among patients with dementia or depression. This study shows that delirium has a serious impact on the rehabilitation outcome from both short- and long-term perspectives. Because delirium can be prevented and treated, it is important to improve the care of elderly patients with hip fractures.