Sheltered housing is a housing model that provides accessible apartments with elevated social possibilities for older people, which is expected to increase resident health and independence, reducing the need for care. As previous research on sheltered housing is scarce, the aim of this study was to explore the characteristics, health status and social participation of older people living in sheltered housing, compared to ageing in place. The study utilised baseline data from a matched cohort study survey on a nationally representative total population of residents in all sheltered housings in Sweden, and a matched control group (n = 3,805). The data collection took place between October 2016 and January 2017. The survey assessed functional capability using the Katz ADL and Lawton IADL scale, self-rated health using the EQ5D scale, and depressive mood using the GDS-4 scale. Descriptive statistics, frequencies, mean scores, independent t tests, p-values and effect sizes were utilised to compare the two groups. The results of the study show that older people living in sheltered housing, compared to ageing in place, had lower self-reported health (M = 64.68/70.08, p = <0.001), lower self-reported quality of life (M = 0.73/0.81, p = <0.001), lower functional status concerning activities of daily living (M = 5.19/5.40, p = <0.001), lower functional status concerning instrumental activities of daily living (M = 4.98/5.42 p = <0.001,), and higher probability of depressive mood (M = 0.80/0.58, p = <0.001). The results imply that residents in sheltered housing may have more care needs than those ageing in place. Further longitudinal comparative studies are needed to explore the impact residence in sheltered housing has on resident health and well-being.