Older adults do not get enough physical activity increasing risk for chronic disease and loss of physical function. The purpose of this study was to determine whether neuromuscular, metabolic, and cardiorespiratory indicators of walking effort explain daily activity in community-dwelling older adults. Sixteen women and fourteen men, 78 ± 8 years, performed a steady-state walk on a treadmill at 1.25 m s-1 while muscle activation, heart rate, lactate, respiratory exchange ratio, oxygen consumption (VO2), ventilation, and rating of perceived exertion (RPE) were recorded as markers of Walking Effort. Daily walking time, sitting/lying time, energy expenditure, and up-down transitions were recorded by accelerometers as markers of Daily Activity. Structural equation modeling was used to explore the relationship between the latent variables Walking Effort and Daily Activity controlling for age and BMI. Participants spent 9.4 ± 1.9 h of the waking day sedentary and 1.9 ± 0.6 h walking. In the structural equation model, the latent variable Walking Effort explained 64% of the variance in the Daily Activity latent variable (β = 0.80, p = 0.004). Walking Effort was identified by heart rate (β = 0.64), ventilation (β = 0.88), vastus lateralis activation (β = 0.49), and lactate (β = 0.58), all p < 0.05, but not RPE or VO2. Daily Activity was identified by stepping time (β = 0.75) and up-down transitions (β = 0.52), all p < 0.05. Walking effort mediated the effects of age and BMI on older adults' daily activity making physiological determinants of walking effort potential points of intervention.