Purpose: The purpose of this study was to compare the effects of Tai-Chi exercise (TCE) and resistance exercise (RE) when used as part of a community-based exercise program on improvement of physical function in elderly women with knee arthritis. Methods: Forty-seven women with knee arthritis participated in this study. They were assigned to one of two groups: the TCE group (n=22) or the RE group (n=25). Tai-Chi exercise and resistance exercise sessions were held for 1 hour per session, twice per week, for 8 consecutive weeks. At pre-treatment and post-treatment, subjects were tested using the following measurements: one-legged stand test (sec), a functional reach test (cm), a test of the strength of the knee extensor and flexor muscles, determination of the pathway of center of foot pressure and vertical ground reaction force for stance phase at pre and post treatment time points. An independent t-test and a ${chi}^2$ were used to determine the significance of differences between group means using SPSS 12.0. Results: After 8 weeks of participation in the exercise programs, there were significant improvements for both groups in joint pain, difficulty of performing activity, muscle strength of knee extensor and flexor. Also, vertical ground reaction force increased at the loading response phase for both groups. The RE group was significantly different from TC group on the eyes-closed one-legged stand test (sec). Conclusion: Tai-Chi exercise and resistance exercise programs improve physical functioning and reduce pain and locomotion difficulties.