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The role of formal volunteering in mental health promotion among older adults in China has been widely discussed during recent decades. However, the relationship connecting mental health with cross‐level interaction (i.e., average levels of participation in the community vs. individual participation) is still unclear. This paper examined the effects of cross‐level formal volunteering on depressive symptoms among older adults living in China. Using two waves of the China Longitudinal Aging Social Survey, a sample of 3128 Chinese older adults was surveyed in 2014 and 2016. Depressive symptoms were measured using the abbreviated CES‐D‐9. Individual fixed‐effects ordinary least squares regression models assessed the associations between individual‐ and community‐level formal volunteering and depressive symptoms in urban and rural areas separately. We found that in the urban sample, formal volunteering activities were negatively associated with depressive symptoms at the individual level (β = −0.49, SE = 0.22, p < 0.05). Higher community‐level formal volunteering was positively associated with depressive symptoms (β = 2.82, SE = 1.42, p < 0.05). When adding interactions between individual and community levels, engagement in individual‐level formal volunteering was associated with lower rates of depressive symptoms as community volunteering participation levels increased (β = −3.07, SE = 1.07, p < 0.01). High community‐level volunteering participation was detrimental for non‐volunteers. In rural areas, neither community‐ nor individual‐level formal volunteering was associated with changes in depressive symptoms. The current findings demonstrate formal volunteering may not always benefit mental health for all. The effects may depend on the community context and individual choices. Social policies aimed to promote mental health through formal volunteering need to be tailored according to the specific community social environment. [ABSTRACT FROM AUTHOR]