Rosemary Kennedy, the oldest sister of President John F. Kennedy and the inspiration for the Special Olympics, died Friday. She was 86.

Kennedy, the third child of Rose and Joseph Kennedy, was born mentally retarded and underwent a lobotomy when she was 23. She lived most of her life in a Jefferson, Wis., institution, the St. Coletta School for Exceptional Children.

She died in a Wisconsin hospital with her brother, Sen. Edward M. Kennedy, and her sisters at her side, the family said.

“Rosemary was a lifelong jewel to every member of our family,” the family statement said. “From her earliest years, her mental retardation was a continuing inspiration to each of us and a powerful source of our family’s commitment to do all we can to help all persons with disabilities live full and productive lives.”

“We know our parents and our brothers and sister who have gone before us are welcoming her joyfully home to heaven,” the family said.

Inspired Special Olympics

Rosemary Kennedy’s condition became an inspiration to her younger sister, Eunice Kennedy Shriver, who became an activist in the field of mental retardation. Shriver later founded the Special Olympics for mentally disabled athletes, and in 1984 she took over her sister’s care after their mother had a stroke.

While Rosemary remained largely out of the public eye for more than 40 years, her retardation became public in 1960, just after her brother John was elected president. The National Association for Retarded Children mentioned in a publication that the president-elect “has a mentally retarded sister who is in an institution in Wisconsin.”

The following year, Eunice revealed more about her sister’s story in an article for The Saturday Evening Post. “Early in life Rosemary was different,” she wrote. “She was slower to crawl, slower to walk and speak. ... Rosemary was mentally retarded.”

Born Rose Marie Kennedy on Sept. 13, 1918, in Boston, she was known as Rosemary or Rosie to friends and family. Her retardation may have stemmed from brain damage at birth.

But in her own diaries before the lobotomy she chronicled a life of tea dances, dress fittings, trips to Europe and a visit to the Roosevelt White House.

Preserved by her mother’s secretary, the diaries came to light in 1995, in a book. And while they revealed no great secrets, the three diaries — written between 1936 and 1938 — described people she met and concerts and operas she attended.

Lobotomized as a young woman

But as she got older, her father worried that his daughter’s mild condition would lead her into situations that could damage the family’s reputation.

“Rosemary was a woman, and there was a dread fear of pregnancy, disease and disgrace,” author Laurence Leamer wrote in an unauthorized Kennedy biography called “The Kennedy Women: The Saga of an American Family.” He wrote that Rosemary had taken to sneaking out of the convent where she was staying at the time.

Doctors told Joseph Kennedy that a lobotomy, a medical procedure in which the frontal lobes of a patient’s brain are scraped away, would help his daughter and calm her mood swings that the family found difficult to handle at home.

Psychosurgery was in its infancy at the time, and only a few hundred lobotomies had been performed. The procedure was believed to be a way to relieve serious mental disorders. Leamer wrote that Rosemary was “probably the first person with mental retardation in America to receive a prefrontal lobotomy.”

Rosemary lived in several private institutions before her father placed her in St. Coletta, an hour west of Milwaukee. He oversaw construction of a private house there for Rosemary and two nurses. Later, the Kennedy family gave the institution $1 million, in honor of Rose Kennedy’s 93rd birthday.

“We are forever thankful to the loving members of the St. Coletta community who cared for Rosemary, loved her, and in a very real sense became extended members of our family,” the family statement said.

During the 1980s, Eunice involved Rosemary more in the lives of her siblings and their children. She attended family gatherings in Hyannis Port, Mass., New York and elsewhere more frequently than before.