Background Social isolation has been recommended for reducing older adults' mortality and severe cases of COVID illness. That has resulted in unavoidable consequences of mental ill‐health. This study aimed to examine the impact of the COVID‐19 lockdown on the development of loneliness and depression and to analyse the factors associated with these conditions among community‐dwelling older adults in Jordan. Methods A cross‐sectional survey was conducted with a random sample of 456 community older adults contacted by telephone three weeks after the first pandemic lockdown in April 2020. The study instrument included the screening three‐item UCLA Loneliness Scale, the Geriatric Depression Scale, and relevant medical and functional history. Results The mean age was 72.48 ± 6.84 years, and 50.2% were women. 41.4% were lonely, and of those 62% had a positive screen for depression. The mean UCLA score was significantly higher during the lockdown than before. Loneliness was significantly associated with being unmarried, having never worked previously, and being functionally dependent. Lonely participants were 1.65 times more likely to have depression. Likewise, a previous history of depression and cognitive impairment, multimorbidity, poor self‐perceived health, and concern about contracting COVID infection were significant predictors of depression. Conclusion The COVID‐19 pandemic has had a heavy toll on older adults' mental health, particularly those with multimorbidity, baseline functional dependence, and those with a previous history of depression and cognitive impairment. Targeting these high‐risk groups is important in order to minimize loneliness, depression, and subsequent increased morbidity. Using all‐inclusive language might minimize ageism and the fear of catching an infection.