Abstract Objectives An engaged lifestyle has been linked to measures of functional ability in everyday life. However, the underlying mechanism of this link is still understudied. We propose working memory as a potential mediator of this relation. Methods Modeling data of 158 older adults with a latent-variables approach, we examined whether working memory mediated the relation between an engaged lifestyle, that is, intellectual, social, and physical activities, and functional ability, that is, self-reported everyday failures and test-based everyday performance. Results Working memory was found to fully mediate the relation between gaming activities and test-based everyday performance. Furthermore, we found a negative association between sports activities and self-reported everyday failures not mediated through working memory, indicating that individuals who reported high levels of sports activities reported fewer everyday cognitive failures. All other lifestyle activities were, however, neither directly nor indirectly associated with functional ability. Discussion Working memory is one pathway by which gaming activities are related to test-based measures of functional ability in everyday life. Given the overlapping cognitive demands of working memory, gaming activities, and the test-based measure of functional ability, the findings suggest that while an engaged lifestyle can benefit functional ability, those benefits may be limited to highly similar domains.