This paper reports a study to determine changes in the physical fitness (knee and ankle muscle strength, balance, flexibility and mobility), fall avoidance efficacy and fall episodes of institutionalised older adults after participating in a 12-week Sun-style tai chi exercise programme. A quasi-experimental design with a non-equivalent control group was used. A total of 68 fall-prone older adults with a mean age of 77.8 years participated in the study, and 29 people in the tai chi group and 30 controls completed the post-test measures. The tai chi exercise programme was provided three times a week for 12 weeks in the experimental group. At post-test, the experimental group showed significantly improved muscle strength in knee and ankle flexors and extensors, and improved flexibility and mobility compared with the control group. There was no significant group difference in fall episodes, but the relative risk ratio for the tai chi exercise group compared with the control group was 0.62. The experimental group reported significantly more confidence in fall avoidance than did the control group.