The adverse effects of fat mass on functional dependence might be attenuated or worsened, depending on the level of muscular strength. The aim of this study was to determine (i) the detrimental effect of excess adiposity on dependence in activities of daily living (ADL), and (ii) whether relative handgrip strength (HGS) moderates the adverse effect of excess adiposity on dependence, and to provide the threshold of relative HGS from which the adverse effect could be improved or worsened. A total of 4169 participants (69.3 ± 7.0 years old) from 244 municipalities were selected following a multistage area probability sampling design. Measurements included anthropometric/adiposity markers (weight, height, body mass index, waist circumference, and waist-to-height ratio (WHtR)), HGS, sarcopenia “proxy” (calf circumference), and ADL (Barthel Index scale). Moderation analyses were performed to identify associations between the independent variable (WHtR) and outcomes (dependence), as well as to determine whether relative HGS moderates the relationship between excess adiposity and dependence. The present study demonstrated that (i) the adverse effect of having a higher WHtR level on dependence in ADL was moderated by relative HGS, and (ii) two moderation thresholds of relative HGS were estimated: 0.35, below which the adverse effect of WHtR levels on dependency is aggravated, and 0.62, above which the adverse effect of fat on dependency could be improved. Because muscular strength represents a critically important and modifiable predictor of ADL, and the increase in adiposity is inherent in aging, our results underscore the importance of an optimal level of relative HGS in the older adult population.