Functional literacy is one of the targets of the Sustainable Development Goals (SDGs) of the United Nations. Functional literacy indicators are likely to vary between locations given the geographical variability of its major determinants. This property poses a challenge to decisions around efficient allocation of population services and resources to mitigate the impact of functional literacy in populations most in need. Using functional literacy indicators of 11,313 school-aged children collected in 2008 during the nationwide survey, the current study examined the association between functional literacy and geographical disparities in socioeconomic status (SES), water supply, sanitation and hygiene, household education stimuli, and environmental variables in all three regions of the Philippines (Luzon, the Visayas, and Mindanao). Three nested fixed-effects multinomial regression models were built to determine associations between functional literacy and a wide array of variables. Our results showed the general prevalence rate of functional illiteracy as being 4.7%, with the highest prevalence rate in the Visayas, followed by Mindanao and Luzon (7.5%, 6.9%, and 3.0%, respectively. Our results indicated that in Luzon prevalence of functional illiteracy was explained by variation in household education stimuli scores, sources of drinking water, and type of toilet facility. In Mindanao and the Visayas prevalence of functional illiteracy was primarily explained by geographical variation in SES, and natural environmental conditions. Our study highlights region-specific determinants of functional literacy and the need for geographically targeted, integrated interventions.