Purpose: This study was conducted to compare the level of cognitive and physical function by the level of social disengagement in institutions and community dwelling elderly. Method: The study subjects were 209 people whose age ranged from 65 to 94. The data were surveyed with social disengagement index, MMSE-K, and ADL, and analysed by SPSS 11.0 using frequency, t-test, ANCOVA and ANOVA. Results: 1) The level of social disengagement was 1.67 in institution and 3.25 in community elderly, and showed statistically significant difference (F=41.07, p<.001). 2) There were statistically significant difference in MMSE-K (F=15.51, p<.000), and activity of daily living (F=9.65, p=.002) between two residence after control the age, gender, religion, allowance and number of children. 3) There were statistically significant difference in MMSE-K (F=6.55, p=.002) by social disengagement in community dwelling elderly. Conclusions: Programs for successful aging to reduce social disengagement should be developed that stimulate social activities and then improve cognitive function for the elderly. For these, establishing social policies in nation and local government is needed. Especially, these policies should be conducted among the elderly with low-income living in institutions.