Background: Both caregiving intensity and caregivers’ multiple chronic conditions (MCCs) are important aspects of caregiving that might affect the health and well-being of older spousal caregivers, but few investigations have simultaneously modelled their impact during the transition into spousal caregiving. Objective: To examine the differential effects of caregiving intensity and caregivers’ MCCs on functional health over time among individuals entering the spousal caregiver role. Methods: A total of 1,866 non-caregivers at the baseline were followed over a 4-year period (2011–2015). The effects of transitioning into caregiving (transitioned into low-intensity and transitioned into high-intensity versus never-caregiver) and caregivers’ MCCs (reported before and during the transitioning period versus no MCCs) on functional health at the follow-up were estimated using mixed-effects regression models. Results: Transitioning into spousal caregiving was associated with a decline in functional health, particularly for those transitioned into high-intensity caregiving, and for those who reported MCCs when transitioning into the caregiver role. The association between transitioning into spousal caregiving and functional decline was strongest for high-intensity caregivers reporting MCCs when transitioning into caregiving, followed by low-intensity caregivers reporting MCCs when transitioning into caregiving. Conclusion: The results highlight the contribution of transitioning into high-intensity caregiving and caregivers’ MCCs to the functional health decline of spousal caregivers. Caregiver support interventions should target spousal caregivers who have newly entered a demanding caregiving role; clinical attention should be emphasised for the development of caregivers’ own MCCs coinciding with the transitioning period.