Aim There has been increasing interest in the effect of social capital (SC) on health over the last decade both in Japan and internationally. This study elucidated whether components of SC are linked to the psychogeriatric health of older Japanese individuals. Method Data for 169 eligible older people dwelling across three rural areas were collected. Multilevel analyses were performed to examine associations between general trust, informal social interaction and formal group participation with self‐rated health, mini‐mental state examination (MMSE), self‐rating depression scale (SDS) and general self‐efficacy scale (GSES). Results Our study revealed that MMSE, SDS and GSES were significantly associated with informal social interaction and formal group participation after adjusting for area‐level SC. However, we observed no relationship between general trust and health outcomes. Conclusion The findings suggest that the strategic enhancement of social cohesion and social networks for older people may promote their health and quality of later life.