This study examines the effect of intergenerational exchange on nursinghome admissions among functionally disabled older adults in Taiwan. A groupof 317 nursing home residents were randomly selected from all nursing homesin Taipei, the capital of Taiwan. In addition, two community groups wererandomly selected as multiple controls in the study. The results showed thatintergenerational exchange has a statistically significant effect onnursing home admission after controlling for sociodemographic characteristics and health status. The odds of being admitted into a nursing home was lower for those elderly who provided instrumentalassistance to their families before they were disabled. The adjustedrelative risk estimate was 0.2 (95% CI = 0.1 - 0.6). It showsthat the instrumental assistance the elderly provided to the family beforethey became disabled was reciprocated when they needed ADL assistance. Thisfinding provides strong support for the social exchange theory.