This study assessed the relationship between handgrip strength (HGS) and activities of daily living, balance, walking speed, calf circumference, body muscle, and body composition in elderly patients with thoracolumbar vertebral compression fracture (VCF). A cross-sectional study in a single hospital was performed with elderly patients diagnosed with VCF. After admission, we evaluated HGS, 10-meter walk test (speed), Barthel Index, Berg Balance Scale (BBS), numerical rating scale of body pain, and calf circumference. We examined skeletal muscle mass, skeletal muscle mass index, total body water (TBW), intracellular water, extracellular water (ECW), and phase angle (PhA) in patients with VCF using multi-frequency direct segmental bioelectrical impedance analysis after admission. A total of 112 patients admitted for VCF were enrolled (26 males, 86 females; mean age 83.3 years). The prevalence of sarcopenia according to the 2019 Asian Working Group for Sarcopenia guideline was 61.6%. HGS was significantly correlated with walking speed (P < .001, R = 0.485), Barthel Index (P < .001, R = 0.430), BBS (P < .001, R = 0.511), calf circumference (P < .001, R = 0.491), skeletal muscle mass index (P < .001, R = 0.629), ECW/TBW (P < .001, r = -0.498), and PhA (P < .001, R = 0.550). HGS was more strongly correlated with walking speed, Barthel Index, BBS, ECW/TBW ratio, and PhA in men than women. In patients with thoracolumbar VCF, HGS is associated with walking speed, muscle mass, activities of daily living measured using the Barthel Index, and balance measured using BBS. The findings suggest that HGS is an important indicator of activities of daily living, balance, and whole-body muscle strength. Furthermore, HGS is related to PhA and ECW/TBW.