Whey protein supplementation (WPS) has been shown to improve functional outcomes in populations that are able to participate in high-intensity resistance training. The purpose of the study was to evaluate the efficacy of WPS on rehabilitation outcomes in a frail, hospitalized elderly population. Men and women (n = 47) were randomly assigned to either a control group or WPS group for the length of their hospital stay. Several functional and serum measures were determined pre- and post-intervention. WPS significantly increased average daily protein intake and was well tolerated. The WPS group exhibited significant improvements in grip strength and knee extensor force over the control group, and a significant positive correlation was found between change in prealbumin and percent-increase knee extensor force. These findings support the use of WPS to improve protein nutritional status and rehabilitation outcomes in a clinical setting involving a frail, elderly population.