This study aimed to explore the combined effects of having sleep problems and taking sleeping pills on the skeletal muscle mass and performance of community-dwelling elders. A total of 826 participants who have complete information regarding dual-energy X-ray absorptiometry examination, questionnaire, and physical performance tests were included. The status of having sleep problems and taking sleeping pills was assessed with a self-reported questionnaire. The prevalence rates of sleep problems among older men and women were 37.4% and 54.5%, respectively. After multivariate adjustment, the mean height-adjusted skeletal muscle indices for elders having sleep problems and taking sleeping pills among men and women were 7.29 and 5.66 kg/m2, respectively, which were lower than those without sleep problems (P = 0.0021 and P = 0.0175). The performance of the older men having sleep problems and taking sleeping pills in terms of walking speed, grip strength, and number of squats, was poorer than those of the older men without sleep problems. The status of having sleep problems and taking sleeping pills was correlated with low skeletal muscle mass and poor physical performance in community-dwelling elders. These findings suggest that having sleep problems and taking sleeping pills are associated with having sarcopenia among community elderly.