Background <p>Depression constitutes a substantial psychological issue among older adults in China. Traditional Chinese culture emphasizes family care for older adults; however, modernization has increased institutional care. This study aimed to examine the association between living arrangements and depression among older adults in China while considering the moderating effect of household registration status (hukou) due to rural–urban disparities in social resources.</p> Methods <p>We utilized Chinese Longitudinal Healthy Longevity Survey 2018 data involving 10,089 older adults. Depression was assessed utilizing the 10-item Center for Epidemiologic Studies Depression Scale. Living arrangements included living alone or with a spouse, with children, and in institutions. The household registration status was urban or rural. A hierarchical multiple regression analysis was performed to investigate the direct and moderating effects.</p> Results <p>Older adults living with children were less depressed than those living alone or with a spouse. Older adults staying in institutions had fewer depressive symptoms. Rural older adults experienced higher levels of depression than their urban counterparts. The household registration status played a role in the relationship between living in institutions versus living alone or with a spouse and depression, where urban areas showed a significant positive effect.</p> Conclusion <p>The results are consistent with the convoy model of social relations, social integration theory, and the stress-buffering hypothesis, which explain how social resources and living arrangements can lessen depression among the older adults. Living in urban areas provides more opportunities for social networks and resources, contributing to better mental health. The present work serves to inform urban and rural policies with regard to increasing social support and decreasing ‍‌depression.</p>