Background: The burden of disability on individuals and society is enormous in India, and informal care systems try to reduce this burden. This study investigated the association between neighbourhood cohesion and disability in a community-based population in Kerala, India. To the best of our knowledge, no previous studies have examined this association in India. Methods: A cross-sectional household survey was conducted with 997 participants aged 30 years and above, in Kerala. Neighbourhood cohesion was assessed by three scales: trust, community participation, and perceived safety. Functional ability was measured by WHODAS 2.0. Explanatory covariates included chronic disease conditions, age, gender, education, income, and mental health conditions. Results: Of 997 participants (37% male; mean age, 53.9 [range, 30–90] years), the majority were married or cohabiting. Univariate analysis showed functional ability to be positively associated with most demographic and health characteristics. However, after adjustment, only social cohesion, age, income, education, chronic diseases and mental health conditions remained significant. Mediation analysis showed the effect of personal and health characteristics on functional ability as mediated by social cohesion. Conclusion: Social cohesion is an important moderator of functional ability. Interventions targeting the creation of stronger ties among neighbours and a sense of belonging should be scaled-up and evaluated in future research.