Physical activity has been shown to be positively associated with cognitive health, but the mechanisms underlying the benefits of physical activity on cognitive health are unclear. The present study simultaneously examined two hypotheses using structural equation modeling (SEM). The depression-reduction hypothesis states that depression suppresses cognitive ability and that physical activity alleviates dysphoric mood and thereby improves cognitive ability. The social-stimulation hypothesis posits that social contact, which is often facilitated by socially laden physical activities, improves cognitive functioning by stimulating the nervous system. Sedentary behavior in the absence of physical activity is expected to exert an inverse relationship on cognitive health through each of these hypotheses. Community-dwelling elders (N = 158) were administered a variety of measures of cognition, depression, social support, and physical activity. SEM techniques provided partial support for the social-stimulation hypothesis and depression-reduction hypothesis. Implications for treating depression and improving cognitive functioning are discussed.