Abstract Background Despite compelling evidence from the United States of ethnic inequalities in physical functioning and ethnic differences in risk factors for poor physical functioning, very little is known about ethnic differences in the United Kingdom. Furthermore, the life stage at which these ethnic differentials are first observed has not been examined. Methods Using cross-sectional data from Wave 1 of the UK Household Longitudinal Study (UKHLS), we compared self-reported physical functioning among 35,816 White British, 4,450 South Asian and 2,512 African Caribbean men and women across different stages of adulthood (young adulthood, early middle age, late middle age, older age). Regression analyses examined ethnic differences in functional limitations, with adjustment for socioeconomic and clinical covariates. Ethnicity by sex and ethnicity by age-group interactions were examined, and subgroup heterogeneity was explored. Results Compared with White British adults over the age of 60, older South Asian men and women reported higher odds of functional limitations (odds ratio [OR] 2.77 [95% confidence interval {CI}: 2.00–3.89] and OR 3.99 [2.61–6.10], respectively); these ethnic differentials were observed as early as young adulthood. Young African Caribbean men had lower odds of functional limitations than White British men (OR 0.56 [0.34–0.94]), yet African Caribbean women reported higher odds of functional limitations in older age (OR 1.84 [1.21–2.79]). Conclusions There is an elevated risk of functional limitations relating to ethnicity, even in young adulthood where the impact on future health and socioeconomic position is considerable. When planning and delivering health care services to reduce ethnic inequalities in functional health, the intersectionality with age and sex should be considered.