INTRODUCTION: Many countries are extending working lives to counteract the shrinking labor force caused by population aging. However, the health implications of this approach for middle-aged and older adults remain unclear, particularly in low- and middle-income countries. METHODS: Data were drawn from the 2011-2020 China Health and Retirement Longitudinal Study to analyze the effect of labor force participation on multidimensional health, with a focus on activities of daily living disability, depressive symptoms, and cognitive impairment. A longitudinal g-formula was applied to address the endogeneity associated with long-term employment and simulate the life course of a synthetic cohort aged 45-80 years. The impact of extending working lives to age 63 for men and age 58 for women on health outcomes was estimated. RESULTS: Labor force participation was negatively associated with the onset of activities of daily living disability but positively associated with the onset of depressive symptoms and cognitive impairment among middle-aged and older adults. Extending working life slowed the progression of activities of daily living disability but increased the risk of depressive symptoms and cognitive impairment, especially in women. These effects persisted beyond working years and into postretirement. Higher education levels mitigated the negative impact of extended working lives on cognitive function. CONCLUSIONS: While extending working lives may benefit physical functioning, it poses risks to depressive symptoms and cognitive health, particularly for women. National policies promoting longer working lives should incorporate targeted preventive measures to protect the psychological and cognitive health of middle-aged and older adults.