Objectives: The aim of this study was to compare the quality of life and mental health, among the elderly people who were living in nursing homes and elderly people who were members of retired club of Shiraz city. Methods & Materials: This research was a descriptive cross-sectional study. The sample of study selected among the elderlys living in nursing homes in shiraz city (30 male & 30 female out of a total of 260) and members of the retired club in shiraz (30 male & 30 female out of total of 360) through random cluster sampling in nursing homes and matched samples in club. Data were collected by quality of life SF-36 and GHQ-28 questionaries and biographical inventory. Collected data were analized by spss-15 software. Due to this action, Independent T-test were used to compare the averages of two groups. and analysis of variance. Results: Average score of Quality of life of the elderly living in nursing homes was 83. 85 with and std. deviation 5.26 and in members of retired club was 93.13 with  and std. deviation 5.51. and also the average score of mental health in elderlys who were living in nursing homes was 54.05 with (P<0.000) and std. deviation 8.8 and in members of retired club was 28.60 with (P<0.000) and std. deviation 8.88. Conclusion: Findings indicate a significant difference in all subscales of quality of life and mental health between two groups of elderly people living in nursing homes and those who live at home, and all findings suggests a better condition for elderly people who live at home. Also results indicate that demographic variables can moderate the effects of living condition.