Although the physical environment as a co-determinant of health could be approached in many ways, we chose to focus on an understudied area: how the immediate living environment can act as a persuasive force affecting physical activity level in older people, with physical activity in turn affecting health status. To explore this topic, the methods and findings of a literature search are described, the theoretical underpinnings of our thesis are presented, and an example is given of how a planned environment, which upon first glance seems supportive, may have unexpected and negative consequences on the activity level, and ultimately the health status, of the residents. Theory related to changes with aging in homeostatic capacity and reserve capacity of organ systems as well as Lawton's environmental press-competence model are applied to environmental characteristics (e.g., staircases) of continuing care retirement communities. We argue that physically challenging aspects of the environment, such as stairs, should be included in the design of living spaces for the elderly with the goal of encouraging greater daily physical activity and improved health status.