Physical activity (PA) improves function in older obese adults. However, body mass index is an unreliable adiposity indicator better reflected by waist circumference (WC). The impact of PA on physical impairment and mobility with high WC is unclear. We performed a secondary data analysis of 4,976 adults ≥ 60 years of age using the National Health and Nutrition Examination Survey (NHANES) 2005-2010. Physical limitations (PL), activities of daily living (ADL) impairments, and PA (low = < 1 day/week or high = > 1 day/week) were self-reported. WC was dichotomized (females: 88 cm; males: 102 cm). Mean age was 70.1 years and 55.1% were female. Prevalence of PL and ADL impairment in the high WC group were 57.7% and 18.8%, respectively, and high PA was present in 53.9%. Among those with high WC, high PA vs. low PA participants were at lower risk of PL (OR 0.58 [0.48-0.70]) and ADL impairment (OR 0.46 [0.32-0.65]). Those with high WC had higher odds of PL irrespective of PA (high PA: OR 1.57 [1.30-1.88]; low PA: OR 1.52 [1.29-1.79]) and ADL impairment (high PA: OR 1.27 [1.02-1.57] and low PA: OR 1.24 [0.99-1.54]). High PA in viscerally obese individuals is associated with impairments.