The aim of this study was to verify whether the relationship between nutritional and functional status differs between seniors in the community and those in long-term care institutions. One hundred nursing home (NH) residents aged 60 years and above and 100 sex- and age-matched community-dwelling (CD) older adults were examined. Functional status was assessed using the Comprehensive Geriatric Assessment (CGA) and nutritional status using anthropometric measures, the Mini Nutritional Assessment questionnaire (MNA) and bioimpedance analysis (BIA). Significant environmental interactions were observed with resting metabolic rate (RMR), extracellular water (ECW) and intracellular water (ICW) ratio, skeletal muscle mass (SMM), skeletal muscle index (SMI) and impedance (Z) and resistance (R) to the results of the Timed Up and Go (TUG) test. The two groups demonstrated different relationships between Z and R and handgrip strength and between Geriatric Depression Scale (GDS) score and fat free mass (FFM), body density, total body water (TBW) and phase angle (PhA). Nutritional status seems to be more important for functional state in CD older people than in NH residents. Therefore, to ensure the functional independence of seniors living in the community, it is crucial to maintain the correct nutritional parameters. Further studies are necessary to account for the fact that this relationship is less significant among NH residents and to identify other factors that may contribute to these discrepancies between community and institutional environments.