Home environment is essential to older adults. While existing studies have investigated the positive implications of home modification strategies for older adults and proposed relevant policies and programmes, literature has remained relatively silent on how older adults perceive their needs for their home environment and its modification, especially during and after they go through home modification projects. This study investigated community-dwelling older adults' perceptions of needs for home modification in Shanghai. Informed by theories in environmental gerontology and tenets of awareness of age-related change, we conceptualised two intertwined, evolving processes of person–environment (P-E) interactions: older adults' interactions with their home environment, and the interactions between their perceptions of needs for home modification and the ageing process. Taking a qualitative approach, we interviewed community-dwelling older adults who were among the first to have received a pilot government-sponsored home modification project in Shanghai (N = 15). Our findings suggest that older adults' P-E dynamics evolved in response to their perception of their home environment and ageing process. Most participants initially were unaware of their underlying needs for home modification even when they had encountered challenges in their apartments. As the home modification project took place, participants gradually gained knowledge of their home environment and the following modification, which enabled them to better identify and articulate their needs to improve their daily living. After the project, participants' understandings of their home environments continued to evolve, expanding to their neighbourhood. This study informs policy and practice to focus on recognising the evolving aspects of older adults' needs in their home environment and better engaging older adults in the process of home modification.