Abstract Background Living longer independently may be facilitated by an attractive and safe residential area, which stimulates physical activity. We studied the association between area characteristics and disabilities and whether this association is mediated by transport-related physical activity (TPA). Methods Longitudinal data of 271 Dutch community-dwelling adults aged 65 years and older participating in the Elderly And their Neighbourhood (ELANE) study in 2011–2013 were used. Associations between objectively measured aesthetics (range 0–22), functional features (range 0–14), safety (range 0–16), and destinations (range 0–15) within road network buffers surrounding participants’ residences, and self-reported disabilities in instrumental activities of daily living (range 0–8; measured twice over a 9 months period) were investigated by using longitudinal tobit regression analyses. Furthermore, it was investigated whether self-reported TPA mediated associations between area characteristics and disabilities. Results A one unit increase in aesthetics within the 400 m buffer was associated with 0.86 less disabilities (95% CI −1.47 to −0.25; p < 0.05), but other area characteristics were not related to disabilities. An increase in area aesthetics was associated with more TPA, and more minutes of TPA were associated with less disabilities. TPA however, only partly mediated the associated between area aesthetics and disabilities. Conclusions Improving aesthetic features in the close by area around older persons’ residences may help to prevent disability.