Background: Numerous reported studies have shown that vertebral compression fractures are associated with impaired function or disability; however, few examined their association with objective measures of physical performance or functioning. Methods: We examined the association of vertebral compression fractures with physical performance measures in 556 Japanese women aged 40-89 years. Lateral spine radiographs were obtained and radiographic vertebral compression fractures were assessed by quantitative morphometry, defined as vertebral heights more than 3 SD below the normal mean. Measures of physical performance included walking speed, chair stand time and functional reach. Adjusted means of performance-based measures according to the number and severity of vertebral compression fractures were calculated using general linear modeling methods. Results: After adjusting for age, body mass index, back pain, number of painful joints, number of comorbidities and regular physical activities, the walking speed of women with two or more compression fractures (1.17 m/s) was significantly slower than that of women without compression fracture (1.24 m/s) (p = 0.03). Compared with women without compression fracture, chair stand time was longer in women with two or more compression fractures (p = 0.01), and functional reach was shorter (p = 0.01). No significant differences were observed in walking speed, chair stand time, or functional reach between women with one compression fracture and those without compression fracture. Conclusions: Having multiple vertebral compression fractures affects physical performance in community-dwelling Japanese women. Poor physical functioning may lead to functional dependence, accelerated bone loss, and increased risk for falls, injuries, and fractures. Preventing vertebral compression fracture is considered important for preserving the independence of older adults.