The relationship between sleep disturbance and subjective cognitive decline has recently come into the spotlight, as researchers continue to look at the effects of sleep disturbance on the early detection of Alzheimer’s disease and the overall well-being of older individuals. Nevertheless, the results of the studies have shown mixed results in tracing the relationship between the process of sleep disturbance and objective indices of decline in cognitive functioning as well as symptoms of depression and anxiety. This present study therefore aimed to examine this process and the effects of affective disturbance. A total of 101 community dwelling older adults in Korea participated in the study, and had their sleep disturbance level, affective disturbance, subjective cognitive decline, and objective cognitive functioning assessed. The results indicated that affective disturbance fully mediated the relationship between sleep disturbance and subjective cognitive decline, even when controlling for objective cognitive functioning. Such results suggests the possibility that subjective cognitive decline, concurrent with sleep problems in the elderly, may be associated with affective disturbance, and affecting depression and anxiety in particular, therefore emphasizing the importance of utilizing a biopsychosocial approach when addressing the health-related complaints of older adults.