Quality of life is widely used as a measure of individual well-being in developed countries. Social quality (SQ), however, describes how favorable the socioenvironmental components are that impact the life chance of an individual. Despite the associations between SQ, including institutional capacity and citizen capacity, and other community indicators, the impact of SQ on community health status has not been fully examined. This study investigated the interrelationships among institutional capacity, citizen capacity, and their associations with community-level health indicators such as mortality and suicide among 230 local governments in South Korea. Under the principles of conceptual suitability, clarity, reliability, consistency, changeability, and comparability, a total of 81 SQ indicators were collected, and 19 indicators of the 81 indicators were selected. The 19 indicators were transformed by the imputation of missing values, standardization, and geographic information system transformation. It was found that the health outcome of local government was superior as social welfare, political participation, and education were higher. According to the result of the regression analysis based on the regional type, social welfare had the most influence on the health level of local government in both metropolises and small-/medium-sized cities. In addition, education and political participation had a positive effect on the health indicator of local metropolis government. However, SQ indicators did not have any meaningful influence at the county level. Therefore, small- and medium-sized cities need to promote the collective health of the local government through improving social welfare, and metropolises need to consider the complex relationship among other indicators while increasing the level of social welfare and education. Meanwhile, counties need to develop health indicators that reflect aged population characteristics and social environment of rural areas. Therefore, fundamental social welfare benefits need to be guaranteed while improving SQ capacities in order to improve the health status of local governments.