This study examines the impact of social engagement on elderly health in China. A two-stage residual inclusion (2SRI) regression approach was used to examine the causal relationship. Our dataset comprises 9253 people aged 60 or above from the China Health and Retirement Longitudinal Survey (CHARLS) conducted in 2011 and 2013. Social engagement significantly improved the self-rated health of the elderly and reduced mental distress, but had no effect on chronic disease status. Compared with the rural areas, social engagement played a more important role in promoting the elderly health status in urban areas. Social engagement could affect the health status of the elderly through health behavior change and access to health resources. To improve the health of the elderly in China and promote healthy aging, the government should not only improve access to effective medical care but also encourage greater social engagement of the elderly.