Objectives: This study examined the impact of co-occurring cognitive impairment and depression on functional limitations, hospital and nursing home admissions, and out-of-pocket expenditures (OOPEs) among older adults. Methods: Individual mixed-effects regressions were performed to examine the relationship between cognitive impairment and depression and selected outcomes among 18,315 community-dwelling adults ages 50 and over from the Health and Retirement Study from 1998 to 2010. Results: Cognitive impairment and depression were independently associated with the outcomes of interest, and the estimated effects were largest among individuals with both conditions. Cognitive impairment with comorbid depression predicted limitations in activities of daily living (odds ratio [OR] = 3.02) and instrumental activities of daily living (OR=4.18), hospitalizations (OR=1.53), nursing home admissions (OR=3.34), and an increase of $1,150 in annual OOPEs. Conclusions: Compared with cognitive impairment or depression alone, cognitive impairment plus depression was associated with substantial functional limitations, health services utilization, and costs.