Background Physical distancing measures taken to contain COVID-19 transmission may substantially reduce physical activity levels and cause individuals to adopt a more sedentary lifestyle. Objective The objective of this study is to determine if there was any change in daily steps, an important component of daily physical activity, and examine risk factors for frequent low daily steps during the COVID-19 epidemic. Methods We used data collected from the Step Study, a population-based longitudinal study of walking activity among residents aged ≥40 years in Changsha, China. Daily steps were collected via a smartphone linked to WeChat, a social networking platform. We plotted mean daily steps and the prevalence of low daily steps (≤1500 steps/day) 30 days before (reference period) and 30 days after (epidemic period) January 21, 2020 (date of the first COVID-19 case diagnosed in Changsha), and compared it with the same corresponding period from 2019. We examined the association of risk factors with the prevalence of frequent low daily steps (≤1500 steps/day for ≥14 days) using logistic regression. Results Among 3544 participants (mean age 51.6 years; n=1226 females, 34.6%), mean daily steps dropped from 8097 to 5440 and the prevalence of low daily steps increased from 3% (2287/76,136 person-day) to 18.5% (12,951/70,183 person-day) during the reference and epidemic periods, respectively. No such phenomenon was observed during the corresponding period in 2019. Older age (P for interaction=.001) and female sex (P for interaction<.001) were both associated with a higher prevalence of frequent low daily steps and were more pronounced during the epidemic period. More education was associated with a lower prevalence of frequent low daily steps during the reference period but not the epidemic period (P for interaction=.34). Body mass index or comorbidity were not associated with frequent low daily steps during either period. Conclusions Daily steps of Changsha residents aged ≥40 years dropped significantly during the COVID-19 period, especially among older adults and females. Although successful physical distancing, measured by the rapid downward trend in daily step counts of residents, played a critical role in the containment of the COVID-19 epidemic, our findings of an increase in the prevalence of frequent low daily steps raise concerns about unintended effects on physical activity.