Older individuals' handgrip strength is a predictor of functional health and their self-perceptions of health may influence functional health and disability. Hence, the study explored the associations between handgrip strength and self-reported functional difficulties in activities of daily living (ADL) and instrumental ADL (IADL) among older adults. The study also explored the moderation and mediation effects of self-rated health (SRH) in those associations.Data for the study were drawn from the baseline survey of Longitudinal Ageing Study in India (LASI, 2017-18). This study was conducted on respondents aged 60 years and above with a total sample of 27,707 older adults (men-13,199 and women-14,508). The study assessed handgrip strength using a handheld Smedley's Hand Dynamometer with a cut-off of 19.5 kg for males and 12.5 kg for females. Moderated multivariable regression models and the Karlson-Holm-Breen (KHB) method adjusting for many confounders, were used to explore the moderation and mediation effects of SRH in the association of handgrip strength and functional difficulties.A proportion of 25.80% of men and 26.24% of women of our sample had weak grip strength. A large proportion of older persons experienced difficulty in ADL (23.77%) and IADL (48.36%) in the study. Older adults with weak handgrip strength had higher odds of suffering from functional difficulties in ADL [adjusted odds ratio (aOR): 1.34; 95% confidence interval (CI):1.14-1.57] and IADL [aOR: 1.38; 95%CI: 1.18-1.60] than older adults with strong handgrip. Older adults who had weak handgrip strength and poor SRH had higher odds of difficulty in ADL [aOR: 2.72; 95%CI: 1.61-3.22] and IADL [aOR: 1.87; CI: 1.28-2.74] compared to those with strong handgrip and good SRH. Further, the association between handgrip strength and functional health was mediated by SRH (percent effect mediated: 26% for ADL and 16.84% for IADL).The findings provide further evidence that handgrip strength is connected with the disabling process and moderating and mediating role of SRH in these associations suggest that enhancement of self-perceptions of health among older adults may help prevent ADL and IADL-related issues in the later phase of life.