Abstract: Background: Social capital in the living environment, both on the individual and neighbourhood level, is positively associated with people’s self-rated health; however, prospective and longitudinal studies are rare, making causal conclusions difficult. To shed more light on the direction of the relationship between social capital and self-rated health, we investigated main and interaction effects of individual and neighbourhood social capital at baseline on changes in self-rated health of people with a somatic chronic disease. Methods: Individual social capital, self-rated health and other individual level variables were assessed among a nationwide sample of 1048 non-institutionalized people with a somatic chronic disease residing in 259 neighbourhoods in the Netherlands. The assessment of neighbourhood social capital was based on data from a nationwide survey among the general Dutch population. The association of social capital with changes in self-rated health was assessed by multilevel regression analysis. Results: Both individual social capital and neighbourhood social capital at baseline were significantly associated with changes in self-rated health over the time period of 2005 to 2008 while controlling for several disease characteristics, other individual level and neighbourhood level characteristics. No significant interactions were found between social capital on the individual and on the neighbourhood level. Conclusions: Higher levels of individual and neighbourhood social capital independently and positively affect changes in self-rated health of people with chronic illness. Although most of the variation in health is explained at the individual level, one’s social environment should be considered as a possible relevant influence on the health of the chronically ill.