Positive associations of neighborhood socioeconomic characteristics and older adults’ cognitive functioning have been demonstrated in previous studies, but overall results have been mixed and evidence from European countries and particularly the Netherlands is scarce. We investigated the effects of socioeconomic status (SES) and urbanity of neighborhoods on four domains of cognitive functioning in a sample of 985 Dutch older adults aged 65–88 years from the Longitudinal Aging Study Amsterdam. Besides cross-sectional level differences in general cognitive functioning, processing speed, problem solving and memory, we examined cognitive decline over a period of six years. Growth models in a multilevel framework were used to simultaneously assess levels and decline of cognitive functioning. In models not adjusting for individual SES, we found some evidence of higher levels of cognitive functioning in neighborhoods with a higher SES. In the same models, urbanity generally showed positive or inversely U-shaped associations with levels of cognitive functioning. Overall, effects of neighborhood urbanity remained significant when adjusting for individual SES. In contrast, level differences by neighborhood SES were largely explained by the respondents’ individual SES. This suggests that neighborhood SES does not influence levels of cognitive functioning beyond the fact that individuals with a similar SES tend to self-select into neighborhoods with a corresponding SES. No evidence of systematically faster decline in neighborhoods with lower SES or lower degrees of urbanity was found. The findings suggest that neighborhood SES has no independent effect on older adults cognitive functioning in the Netherlands. Furthermore, the study reveals that neighborhood urbanity should be considered a determinant of cognitive functioning. This finding is in line with theoretical approaches that assume beneficial effects of exposure to complex environments on cognitive functioning. We encourage further investigations into the effect of urbanity in other contexts before drawing firm conclusions.