We conducted a prospective study among elderly women with a first hip fracture to document survival and functional outcome and to determine whether outcomes differ by fracture type. The design was a one-year prospective cohort study in the context of standard day-to-day clinical practice. The main outcome measures were survival and functional outcome, both at hospital discharge and 1 year later. Functional outcome was assessed using the Rapid Disability Rating Scale version-2. Of the 170 women originally enrolled, 86 (51%) had an intertrochanteric and 84 (49%) a femoral neck fracture. There were no significant differences between the two groups with respect to median age (80 and 78 years, respectively), type and number of comorbidities and prefracture residence at the time of injury. At hospital discharge, intertrochanteric hip fracture patients had a higher mortality (p=0.006) and were functionally more impaired (p=0.005). One year later, mortality was still significantly higher after intertrochanteric fracture (relative risk 2.5; 95% confidence interval: 1.3 to 5.1; p=0.008), but functional outcome among surviving patients was similar in both groups. We conclude that intertrochanteric fractures are associated with increased mortality compared to femoral neck fractures. Functional outcome differs according to fracture type at hospital discharge, but these differences do not persist over time. These differences cannot be explained by differences in age or comorbidity. To address the mechanism(s) by which intertrochanteric fractures carry excess mortality compared to femoral neck fractures, future studies in hip fracture patients should include a comprehensive assessment of the degree of frailty, vitamin D status, and fall dynamics.