Frailty is a common age-related condition linked with mobility disorders, long-term care, and death. To prevent frailty, physical activities are considered effective. Several studies have indicated that physical activity can influence mental health as well as body function. Physical activity, cognitive function, and subjective mental health must relate to each other. However, most studies only focus on one-to-one interactions. This observational study aims to clarify the overall relationship and causality between subjective mental health, daily physical activity, and physical and cognitive functions. We recruited 45 people (24 males and 21 females) over 65 years old. Participants visited the university twice and were subjected to activity measurements at home. To examine the causal relationships and related structures between the indicators, structural equation modeling was performed. The results suggest that daily physical activity explains physical function, physical function explains cognitive function, and cognitive function explains subjective mental health, quality of life, and happiness. This study is the first to clarify interactive relationships as an axis that start from daily physical activity to happiness in older adults. Upregulating daily physical activity may improve physical and cognitive functions as well as mental health; this might protect and ameliorate physical, mental, and social frailties.