We study the living arrangements and consequences for emotional well-being of the elderly in China using data from a national probability sample survey conducted in Institute of Social Science Survey. 2010. China Family Panel Studies: 2010 Questionnaire (translated by Cindy Glovinsky, Jingwei Hu, Ryan Monarch, Ni Sha, and Hongwei Xu). Beijing: Peking University, Institute of Social Science Survey. part of the China Family Panel Studies: 14,960 households were included and information was collected for each family member. We study 7,015 people in the sample age sixty and older. We find that, compared to living independently with one’s spouse, elderly respondents living with grown children are less happy, have less life satisfaction, and are more depressed, especially when the spouse is not sharing the household. The negative effects largely disappear when there also are grandchildren in the household although widows and widowers remain more prone to depression. Elderly people living in “generation-skipping” families suffer the same fate as living with adult children but no grandchildren—they are less happy and more depressed and, when not sharing responsibilities with a spouse, less satisfied with life than independent elderly couples. Finally, living alone or living with other relatives results in a significant degradation of emotional health. But the very small fraction of elderly respondents living with non-relatives enjoys the greatest happiness and the least depression.