Purpose of the study: The primary aim of this investigation was to determine whether caregiver confidence in their care recipients’ functional capabilities predicts changes in the performance of activities of daily living (ADL) among elderly home care recipients. A secondary aim was to explore how caregiver confidence and care recipient functional self-efficacy jointly influence changes in ADL performance over time. Design and Methods: The sample included 5,138 elderly recipients of home and community-based long-term care in Michigan. ADL performance was assessed multiple times over a 2-year period. Caregiver confidence was measured at baseline with a single item. Multilevel modeling was used to estimate the effect of caregiver confidence on changes in ADL performance over time, controlling for baseline self-efficacy, ADL performance, and other factors that might confound the relationship. Based on caregiver confidence and elder self-efficacy, we created 4 groups of elder caregiver dyads to explore the combined effect of caregiver and elder confidence on change in ADL performance. Results: Elders whose caregivers were confident in their capacity for greater functional independence experienced greater improvement in ADL performance than those whose caregivers were not confident. Elders in dyads in which both members expressed confidence experienced more improvement in ADL performance than those in dyads in which either one or both members lacked confidence. Implications: Interventions to strengthen caregivers’ confidence in their care recipients’ functional capabilities may slow functional losses among home care elders. Additional research is needed to confirm these findings and identify the factors that influence caregiver confidence.