The functional, interactive, and critical domains of health literacy are associated with health. However, studies examining the relationship between health literacy subdomains and health in the Chinese-speaking context are still limited. Thus, we aimed to examine the association of functional, interactive, and critical health literacy with self-rated health among older Taiwanese adults. A total of 1,072 participants aged 60 or older were included in the analysis. Health literacy was measured by the 11-item short-form Mandarin Health Literacy Scale and validated tools. Self-rated health was categorized into good (good/very good), fair, and poor (poor/very poor) status. Multinomial logistic regression revealed that only interactive health literacy was associated with reporting good health status (OR = 2.30; 95% CI = 1.65 to 3.21). Conversely, all health literacy subdomains were not associated with reporting poor health. This study suggested that interactive health literacy was the key determinant of good self-rated health status for community-dwelling older adults.