Current literature on the relationships between disability and both the physical and social environments of one's living arrangement is scarce. The relationship between disability and living arrangements in later life is inherently complex, yet it has the potential to impact older adults' lives in significant ways. With this dissertation, I sought to address this gap in the literature and add to our understanding of how older adults' environments and functional statuses interact. My specific aims were to: 1.) Describe the living arrangements of older adults with disabilities; 2.) Estimate the risk of developing disability by type of living arrangement (both housing type and household composition) for older adults; and, 3.) Estimate the risk of having a change in living arrangement by disability status for older adults. For all three aims, I also examined how the relationships between living arrangements and disability differed by age and socio-economic status. Data came from the American Community Survey (2012; n=504,371 adults age 65 and older) and the Health and Retirement Study (1998-2012; n=43,182 observations.) In Aim 1, I found that disability was most prevalent for older adults living in situations other than with a spouse only and that the odds of disability was highest for older adults living with children (without a spouse.) Compared with living in a single-family home, the odds of disability were higher for older adults living in mobile homes and large apartment buildings. In Aim 2, I found that living in a nursing home or with others was associated with an increased risk of disability, but that living alone was associated with a decreased risk of disabilities related to Instrumental Activities of Daily Living (IADLs.) This latter finding only held true for more affluent older adults, however; the poorest older adults faced an increased risk of disability if they lived alone. Finally, in Aim 3, I found that having IADL and ADL (Activities of Daily Living) disabilities together was predictive of moving, long nursing home stays, and death. ADL and IADL disabilities separately were predictive of long nursing home stays and death, while prior living arrangements were more predictive of moving than individual ADL or IADL disability status. For all of my findings, disability rates were highest among the poorest and oldest older adults. Older adults with the lowest socioeconomic status were also more likely to live alone, with non-spousal others, in rented homes, and in mobile homes or apartment buildings. This population may need additional resources to foster supportive living arrangements and to mitigate disability risk. These findings can be used to identify where older adults with disabilities live and where to target interventions to prevent worsening disability.