PURPOSE: The health of older people, especially functional ability, has become a hot topic for scholars in various countries. There is insufficient research on the urban-rural disparity in the functional ability of older people. This study aimed to explore the urban-rural gap in the functional ability of older people and the related influencing factors. METHODS: The data analyzed in this study were collected through a cross-sectional survey conducted in China. Furthermore, binary logistic regression was utilized to assess the relationship between functional ability and the independent variables, and Oaxaca-blinder decomposition was used to explore urban-rural differences in functional ability among older people. RESULTS: The percentage of urban older people who were functionally robust was 65.9%, which was significantly higher than the rural 40.4%, and the difference was found to be statistically significant (χ CONCLUSIONS: A higher proportion of older people in rural areas have limited functional ability than in urban areas. Moreover, the disparity in social participation levels significantly contributed to the differences in functional ability observed between older adults in urban and rural settings. This study underscores the significance of enhancing the social engagement of older adults, particularly those living in rural communities.