Purpose: The purpose of this study was to examine the effects of Tai Chi exercise on flexibility, balance, walking ability, muscle strength, bone mineral density, and fracture risk in institutionalized elders. Method: A quasi-experimental pretest-posttest design with a nonequivalent comparison group was utilized, and 53 older adults living in one institution were recruited and assigned to one of two groups, experimental group (18) or comparison (20). Both groups completed posttest measures at 6 months. There was a 31% rate of dropouts. Tai Chi exercise was provided twice a week for 24 weeks. Outcome measurements were conducted by a physiotherapist at a university hospital health promotion center who did not know the group assignment. Results: At 6 months, the experimental group had significantly greater grip strength(t=2.12, p=.04), back muscle strength (t=2.42, p=.02), balance (t=5.31, p<001), and flexibility (t=3.57, p<.001). They also showed significantly greater bone mineral density of lumbar spine and femur, and reduced fracture risk. Conclusion: Tai Chi exercise was safely and effectively used with institutionalized elders for 6 months and significantly improved physical fitness, bone mineral density along with a reduction in fracture risk. Whether Tai Chi exercise would lead to prevention of fall episodes and fall related fractures in this population will require further study.