OBJECTIVES: We aimed to examine the associations of both objectively assessed and perceived physical and social neighborhood characteristics with happiness in European adults. In addition, we aimed to study how these associations differed among subgroups. METHODS: Participants (N = 6037) of the cross-sectional SPOTLIGHT survey reported on their level of happiness using a 5-point Likert scale, and on perceived physical and social environmental neighborhood characteristics. Objective physical environmental characteristics were assessed using a Google Street View-based neighborhood audit. Associations of 14 physical and social environmental characteristics with happiness were analyzed using multivariable multinomial regression analyses with clustered standard errors. RESULTS: Living in neighborhoods with higher levels of aesthetics and more water and green space was associated with being very happy. Individuals who perceived their neighborhood to be safer, more functional and more aesthetic were more likely to be very happy. The associations of functionality and aesthetics with happiness were strongest in the Ghent region (Belgium), the Randstad (the Netherlands) and Greater London (United Kingdom). Perceived absence of air pollution was only associated with higher levels of happiness in more highly educated participants. Individuals with a larger social network, more social cohesion and who trusted their neighbors were more likely to be very happy. The association between social networks and happiness was somewhat stronger in men than in women. In general, the associations between environmental characteristics and happiness had similar directions and sizes across socio-economic and socio-demographic subgroups. CONCLUSIONS: This European study provided evidence that both objectively assessed and perceived physical and social characteristics of the neighborhood environment are associated with the happiness of its residents.