Objectives: Older adults who live alone have been found to have lower psychological well-being than their age peers who live with someone. This study examined whether downward social comparison, i.e. perceiving oneself as better than others, would moderate this relationship. Method: A total of 205 Chinese aged 60 years or over were recruited. They rated themselves and 'someone their age' on a list of personal descriptions. Downward social comparison was defined as the extent to which their ratings of self were better than ratings of age peers. Life satisfaction and depression were measured by the Satisfaction with Life Scale and the CES-D Scale, respectively. Results: Participants living alone were more depressed than those living with someone; yet this difference was larger among those with lower levels than those with higher levels of downward social comparison. This interaction effect was not found for life satisfaction. Conclusion: Findings suggest that, although living alone is a risk factor for depression in old age, its negative effect can be reduced or even eliminated when downward social comparison is practised. These findings highlight the importance and effectiveness of psychological adaptation in the face of relatively more objective challenges in old age.