Children with physical disabilities (PD) are known to have participation restrictions when in inclusive settings alongside typically developing (TD) children. The restrictions in participation over time may affect their mental health status. This study aimed to investigate the longitudinal relationship between independence in activities (capability) and frequency of attendance in activities, in relation to perceived mental health status in children with and without PD. The participants were a convenience sample of parents of 77 school children with PD and 94 TD children who completed four assessments with a one-year interval between each assessment. Parents of these children were interviewed with the Functioning Scale of the Disability Evaluation System—Child version (FUNDES-Child). Three dimensions of mental health problems—loneliness, acting upset, and acting nervous—were rated by parents with the Child Health Questionnaire (CHQ). Linear trend was tested by repeated-measure ANOVA. The results revealed different longitudinal patterns of independence and frequency of attendance over time for children with PD and TD. Frequency of attending activities may be more important than independence in performing activities for experiencing fewer mental health problems. The findings highlight the need for supporting children’s actual attendance in daily activities which may benefit their later mental health.