Elderly in Bhutan are rising steadily as a proportion of total population. In 2015, population older than 60 constituted about 7.3% of the total population compared to 6.9% in 2010. By 2030, the elderly population is estimated to reach 10.1% of total population. Along with growing numbers of elderly in Bhutan and rapid socioeconomic transformations, the individual-level of happiness decreases with age, the lowest being among the elderly (the Gross National Happiness Index surveys of 2010 and 2015 and Bhutan Living Standard Survey 2012). Nevertheless, there is limited literature exploring factors that are associated with happiness of the elderly. This study examined the happiness status and analyzed the determinants of happiness among the elderly population aged 60 years old and over. The Bhutan Living Standard Survey 2012 was used because it provides a nationwide representative sample of 3,211 elderly population. This study showed that in 2012 only about 85% of the Bhutanese elderly were happy. Binary logistics regression was employed to examine the association between outcome variable happiness and a set of variables, including individual and demographic characteristics, living arrangement, social capital and economic factors. Findings showed that region, living arrangement, social capital, absolute and relative economic situations in the elderly’s view, and their religiosity are strongly associated with elderly happiness.The results of this study emphasize roles for government - to develop income security for Bhutanese elderly by introducing home-based income generating programs; develop a long-term old-age policy, introduce a public pension system; and improve social environment and conditions that strengthen family relationship, based on area and region. Those policies will uplift the life, dignity and, most of all, the happiness of the entire Bhutanese elderly population.