Objective: To evaluate the effects of tai chi exercise on risk factors for falls in postmenopausal women with osteopaenia through measurements of balance, gait, physical function and quality of life. Design: A randomized, controlled, single-blinded, 24-week trial with stratification by age and bone mass. Setting: General community. Participants: Sixty-one independently living elderly females aged 65 years and older with low bone mass. Interventions: Subjects were recruited and randomly assigned to 24 weeks of tai chi (60 minutes/session, three sessions/week, n = 30) or a control group (n = 31). Outcome measures: Computerized dynamic posturography, gait, 'timed up and go', five-chair sit-to-stand and quality of life assessed at baseline, 12 and 24 weeks. Results: After 24 weeks, subjects in the tai chi group demonstrated an increase in stride width (P = 0.05) and improvement in general health (P = 0.008), vitality (P = 0.02) and bodily pain (P = 0.03) compared with those in the control group. There was no significant difference in balance parameters, 'timed up and go', five-chair sit-to-stand and other domains of quality of life. Conclusion: Tai chi exercise may reduce risk factors for falls by increasing the stride width, and may improve quality of life in terms of general health, vitality and bodily pain in postmenopausal women with osteopaenia.