Objective: This study examines relationships between local-area age structure and health at older ages. Method: We estimate random intercept models for two disability measures using four waves of data from a national panel study of 3,580 Japanese older adults. Results: Elderly living in relatively older areas reported more difficulties with activities of daily living compared with those living in an “average” age structure. Controlling for individual characteristics and time did little to change this relationship; while a similar relationship between older age structure and functional limitations emerged. Discussion: Residents of relatively older areas tended to have lower socioeconomic status, but this “disadvantage” was offset by their higher rates of employment and marriage. These compositional differences highlight the role of local-area age structure in identifying and understanding elderly health variation between places.