According to Bronfenbrenner’s ecological theory, the interaction between micro- and macro-factors improves human development. Previous studies suggest that community social capital, which refers to the interaction between residents and communities, promotes the subjective well-being of residents in residential communities. However, little is known about the mechanisms underlying this relationship. This study explored the link between community social capital and life satisfaction among urban residents and examined the mediating role of psychological flourishing and moderating effect of educational level. Data were obtained from a cross-community survey of 816 urban residents in China aged 20–60 years. The results indicated that psychological flourishing mediated the link between community social capital and life satisfaction among urban residents after controlling for gender, age, marital status, dwelling time, and monthly income. Furthermore, educational attainment moderated the association between community social capital and psychological flourishing. The mediating effect of psychological flourishing was stronger among residents with low educational attainment than those with high educational attainment, indicating that the benefits of community social capital were greater among the former group. This study extends our knowledge of the effect of community social capital on urban residents’ subjective well-being, including its role in reducing educational inequality in human well-being.