Abstract: Objectives: The coronavirus disease-2019 pandemic has contributed to widespread social and economic stressors, along with substantial health problems, including loss of life. To date, however, relatively few studies have examined the prevalence and correlates of declines in mental and physical functioning in U.S. military veterans, an older and potentially vulnerable segment of the U.S. adult population. Methods: Data were analyzed from the 2019–2020 National Health and Resilience in Veterans Study, a nationally representative, longitudinal study of 3078 veterans. Veterans were surveyed prior to the pandemic (pre-pandemic) and 1 year later during the height of the pandemic (peri-pandemic). Multivariable analyses were conducted to identify risk and protective variables associated with pre-to-peri pandemic declines in self-reported physical and mental functioning. Results: The prevalence of veterans who experienced functional decline (≥0.5 standard deviation reductions) pre-to-peri-pandemic was 18.1% (N = 541) for physical functioning and 18.3% (N = 547) for mental functioning. Older age, greater adverse childhood experiences (ACEs), and pandemic-related posttraumatic stress symptoms were the strongest correlates of physical functional decline, while greater ACEs, loneliness, pandemic-related posttraumatic and social restriction stress symptoms, and lower protective psychosocial characteristics were the strongest correlates of mental functional decline. Conclusions: Although the majority of U.S. Veterans showed functional maintenance or improvement 1 year into the pandemic, nearly one-in-five experienced a decline in physical or mental functioning. Results could help inform identification of veterans who may be at risk for functional decline during large-magnitude stressors, such as national or global pandemics.