In response to the United Nations' call to build a sustainable and age‐friendly society, older adults' public health, normally measured by functional capacity, has been of increasing concern on a global scale. The built environment is closely intertwined with the functional capacity of older adults, as evidenced by extensive studies. However, most studies have focused on exploring linear relationships between the built environment and functional capability yet overlooking non‐linear relationships. This study aims to investigate non‐linear relationships between the built environment and older adults' functional capability. Therefore, this study conducted in 2018 adopts a generalized additive mixed model based on a sample of 1083 participants in a typical aging society of Hong Kong. The results discover improved functional capability among older adults who are younger, female, living with family members, with a longer care cycle and fewer comorbidities. The results also support non‐linear relationships between the built environment and older adults' functional capability. The optimal functional capability of older Hong Kong adults was found under a specific threshold of built environment factors, such as park density with a desirable number of 5 ± 2, intersection density with a maximal threshold of 200, the highest sky view percentage possibly, and land‐use diversity with a minimum threshold of 0.6 for entropy index. The study is of value for relevant stakeholders and policymakers to implement sustainable and age‐friendly urban planning for the built environment for facilitating older adults' public health.