The Disablement Process model explicates the transition from health conditions to disability and specifically emphasizes the role of intervening factors that speed up or slow down the pathway between pathology and disability. We used hierarchical Poisson regression analyses with data on older adults from central North Carolina to examine the role of the built environment as a modifying factor in the pathway between lower extremity functional limitations and activities of daily living. We found that, despite declining physical function, older adults report greater independence in instrumental activities when they live in environments with more land-use diversity. Independence in self-care activities is modified by housing density, in part through the effect of substandard and inadequate housing.