Purpose: The purpose of this study was to identify the effects of 12 weeks of Tai Chi exercise on physical function, stress and depression in middle aged women with osteoarthritis. Method: The research design was a nonequivalent control group pretest-posttest design. Forty two participants were assigned to either the experimental group (21) or control group (21). Frequency, percentages, mean, standard deviations, $X^2$-test, Wilcoxon rank sum test and repeated measured ANOVA with SPSS 12.0/PC program were used to analyzed the collected data. Results: For physical function the physical fitness of the experimental group improved significantly more than the control group: Leg strength, balance, flexibility and grip strength. Difficulty of performing activity had a tendency of decrease. Stress showed a tendency of as time passed but the decrease was not significant. Depression decreased and the change was significant. Conclusion: The Tai Chi exercise was effective in improving physical function and reducing the stress and depression of middle aged women with osteoarthritis. Therefore the Tai Chi exercise could be used as a nursing intervention for osteoarthritis in middle aged women.