Background: Using a national longitudinal sample of nursing homes residents (N = 264,068), we examine whether physical restraint use contributes to subsequent physical or psychological health decline. Methods: The minimum data set; the on-line survey certification and recording system, and the area resource file were the data sources used. This data represented the period of 2004 and 2005. To control for the difference in characteristics between residents who were subsequently physically restrained and who were not, we use a propensity score matching method. Results: For all outcomes examined (except depression), that is, behavior issues, cognitive performance, falls, walking dependence, activities of daily living, pressure ulcers, and contractures, were all significantly worse for restrained residents compared with matched residents who were not restrained. Discussion: Physical restraint use represents poor clinical practice, and the benefits to residents of further reducing physical restraint use in nursing homes are substantial.