Introduction: Aging has been associated with a decline in cognitive and motor performance, often expressed in multitasking situations, which could include wayfinding. A major challenge to successful wayfinding is spatial disorientation, occurring mostly at crossings. Although gait changes have been observed in various dual-task conditions, little is known about the effect of disorientation on gait and psychophysiological response among older adults during wayfinding. The study aimed at identifying the effect of spatial disorientation on gait variability and psychophysiological response among healthy older adults during wayfinding in a controlled environment. Method: We analyzed data of 28 participants (age 70.8 ± 4.6, 18 female), 14 experimental and 14 controls. Participants performed a wayfinding task consisting of 14 major decision points (7 intersections) within a virtual environment (VE) projected on a 180° screen while walking on a self-paced treadmill equipped with a marker-based optical motion-capture system. The VE was held constant for the controls and manipulated for the experimental participants. Disorientation was identified based on a customized annotation scheme. Variability in gait, including the coefficient of variation (CV), was measured as the primary endpoint. Psychophysiological response measures, including heart rate variability (RMSSD) and skin conductance response (SCR), were continuously monitored as secondary endpoints and estimates of cognitive effort. Linear Mixed Effects models were applied to hypothesis-driven outcome measures extracted from decision points. Results: Walking speed and step length decreased when disoriented (p < 0.05), while stride time, stance time, walking speed CV, stance time CV, SCR amplitude, and SCR count increased when disoriented (p < 0.05). A higher RMSSD was associated with being disoriented at crossings (p < 0.05). SCR count was greater in the older experimental group (p < 0.001), including when disoriented (p < 0.001). Discussion/Conclusion: The results provide evidence for the impact of spatial disorientation on changes in gait pattern and psychophysiological response among older adults during wayfinding. Location also had implications for the effect of disorientation on gait and cognitive effort. This gives further insight into the substrates of real-world navigation challenges among older adults, with an emphasis on viable features for designing situation-adaptive interventional devices aiding independent mobility.