Productive aging, or older adults engaging in paid or unpaid activities that produce socially valued goods or services, has been suggested to have the beneficial impact on older adults' health and well-being. We performed a cross-sectional study to examine the influence of health literacy on the relationship between socioeconomic status (SES) and productive aging among older Chinese adults in a newly urbanized community. Data was collected from 995 older adults from a newly urbanized community between June and August 2013 in Chengdu, China. We used structural equation modeling (SEM) to test the hypothesized relationship among SES, health literacy and productive aging. Results showed that education attainment and income had a direct positive effect on health literacy (beta = 0.47and beta = 0.15, respectively). Education had a partial indirect effect on productive aging through health literacy (beta = 0.27). And health literacy was an important factor in improving the productive aging of the elderly. Interventions targeting health education and health promotion should be taken to improve health literacy of older adults under the background of urbanization, especially for those with lower SES.