Abstract Background Little is known of the capabilities of the oldest old, the fastest growing age group in the population. We aimed to estimate capability and dependency in a cohort of 85 year olds and to project future demand for care. Methods Structured interviews at age 85 with 841 people born in 1921 and living in Newcastle and North Tyneside, UK who were permanently registered with participating general practices. Measures of capability included were self-reported activities of daily living (ADL), timed up and go test (TUG), standardised mini-mental state examination (SMMSE), and assessment of urinary continence in order to classify interval-need dependency. To project future demand for care the proportion needing 24-hour care was applied to the 2008 England and Wales population projections of those aged 80 years and over by gender. Results Of participants, 62% (522/841) were women, 77% (651/841) lived in standard housing, 13% (106/841) in sheltered housing and 10% (84/841) in a care home. Overall, 20% (165/841) reported no difficulty with any of the ADLs. Men were more capable in performing ADLs and more independent than women. TUG validated self-reported ADLs. When classified by 'interval of need' 41% (332/810) were independent, 39% (317/810) required help less often than daily, 12% (94/810) required help at regular times of the day and 8% (67/810) required 24-hour care. Of care-home residents, 94% (77/82) required daily help or 24-hour care. Future need for 24-hour care for people aged 80 years or over in England and Wales is projected to increase by 82% from 2010 to 2030 with a demand for 630,000 care-home places by 2030. Conclusions This analysis highlights the diversity of capability and levels of dependency in this cohort. A remarkably high proportion remain independent, particularly men. However a significant proportion of this population require 24-hour care at home or in care homes. Projections for the next 20 years suggest substantial increases in the number requiring 24-hour care due to population ageing and a proportionate increase in demand for care-home places unless innovative health and social care interventions are found.