<p>Using data from the 2018 China Health and Retirement Longitudinal Study (CHARLS), this research probed into the effects of land circulation on the elderly physical health and mental health and their underlying mechanisms. The results revealed that land circulation has a significant positive impact on the health of the elderly, but this health-promoting effect is mainly on mental health, while the impact on physical health is not significant. Moreover, the two different effects still hold after addressing endogeneity using the propensity score matching method and the instrumental variables method. Also, the health effects of land circulation differ in terms of gender, age, and two-generation living arrangement, that is, land circulation significantly strengthens the mental health of the lower-aged elderly, males, and the elderly living with their children. Additionally, the mechanism analysis showed that the increase in non-farm income and social interaction frequency is a vital channel of land circulation affecting the mental health of the elderly. Thus, the land circulation system should be further standardized, and the circulation mechanism for the rural elderly population should be continuously established and improved, thereby effectively bringing into play the health-promoting effects of land circulation.</p>