The role of dietary protein intake on muscle mass and physical function in older adults is important for the prevention of age-related physical limitations. The aim of the present study was to elucidate links between dietary protein intake and muscle mass and physical function in older women meeting current guidelines of objectively assessed physical activity. In 106 women (65 to 70 years old), protein intake was assessed using a 6-day food record and participants were classified into high and low protein intake groups using two Recommended Dietary Allowance (RDA) thresholds (0.8 g·kg bodyweight (BW) and 1.1 g·kg BW). Body composition, aerobic fitness, and quadriceps strength were determined using standardized procedures, and self-reported physical function was assessed using the SF-12 Health Survey. Physical activity was assessed by accelerometry and self-report. Women below the 0.8 g·kg BW threshold had a lower muscle mass ( < 0.05) with no differences in physical function variables. When based on the higher RDA threshold (1.1 g·kg BW), in addition to significant differences in muscle mass, women below the higher threshold had a significantly ( < 0.05) higher likelihood of having physical limitations. In conclusion, the present study supports the RDA threshold of 0.8 g·kg BW of proteins to prevent the loss of muscle mass and emphasizes the importance of the higher RDA threshold of at least 1.1 g·kg BW to infer additional benefits on constructs of physical function. Our study also supports the role of protein intake for healthy ageing, even in older adults meeting guidelines for physical activity.