This study examined the association between participation in community organizations and life satisfaction, and relevant mediating and moderating mechanisms among retirees. Positive and negative affect were considered as mediating variables, and family relation as a moderating variable. A total of 1132 community-dwelling retirees aged 50 years or more were investigated. A self-developed questionnaire with five items measured the level of organizational participation (OP) based on residential community. The Satisfaction with Life scale (SWLS), the Positive and Negative Affect Schedule (PANAS), and Family Cohesion sub-scale of Family Environment Scale (FES) were used to assess life satisfaction, positive and negative affect, and family relation, respectively. Mplus was used to conduct mediating and moderating analyses after controlling for six demographic and socioeconomic factors. First, the results indicated that OP was positively associated with life satisfaction. Second, positive and negative affect partly mediated the relationship between OP and life satisfaction. Third, family relation negatively moderated the relationship between OP and life satisfaction; that is, compared with those retirees with good family relation, the beneficial role of OP in enhancing one's satisfaction was more significant for those retirees with poor family relation; furthermore, family relation also moderated the links of OP-negative affect. These findings suggested that OP related to life satisfaction of retirees through mediating roles of positive and negative affect, and family relation partly moderated the above direct and indirect processes. In a word, OP based on residential community had a positive role in buffering adverse influence of poor family relation.