Background and Purpose: Because of its high prevalence and association with negative health-related outcomes, frailty is considered one of the most important issues associated with human aging and its mitigation is among the essential public health goals for the 21st century. However, very few studies have focused on institutionalized older adults, despite the knowledge that frailty can be reversible when identified and treated from its earliest stages. Therefore, the objective of this study was to evaluate the effects of a supervised group-based multicomponent exercise program intervention with or without oral nutritional supplementation on functional performance in frail institutionalized older adults. Methods: This was a multicenter randomized controlled trial study with a 6-month intervention period. A total of 111 frail institutionalized older adults (75 years or older) who met at least 3 of the 5 Fried frailty criteria were randomly allocated to the control group (CG; n = 34, mean age = 87.3 ± 5.3 years), a supervised group-based multicomponent Otago Exercise Program group (OEP; n = 39, mean age = 86 ± 5.9 years), or a supervised group-based multicomponent exercise program intervention with oral nutritional supplementation (OEP+N; n = 38, mean age = 84.9 ± 6 years). Measurements included the Timed Up and Go test (TUG), Berg Balance Scale (BBS), Short Physical Performance Battery, repeated chair stand test (STS-5), handgrip strength (HGS), 10-m walking test, and 6-minute walking test, both at baseline and after the 6-month intervention period. Results and Discussion: The between-group analysis by 2-way analysis of covariance showed significant improvement in the TUG [{OEP vs CG: −8.2 seconds, 95% CI [−13.3 to −2.9]; P < .001}; {OEP vs OEP+N: −7.3 seconds, 95% CI [−12.4 to −2.2]; P = .002}], BBS [{OEP vs CG; 8.2 points, 95% CI [5.2 to 11.2]; P < .001}; [{OEP+N vs CG: 4.6 points, 95% CI [1.6 to 7.6]; P < .001}; {OEP vs OEP+N: 3.5 points, 95% CI [0.6 to 6.5]; P = .011}], and HGS [{OEP vs CG: 3.4 kg, 95% CI [1.5 to 5.3]; P < .001}; {OEP+N vs CG: 3.6 kg, 95% CI [1.7 to 5.5]; P < .001}]. Additionally, the within-group analysis showed a significant improvement in the TUG (−6.9 seconds, 95% CI [−9.8 to −4.0]; P < .001) and BBS (4.3 points, 95% CI [2.6 to 5.9]; P < .001) in the OEP group. A significant decrease in the BBS and HGS was shown in the CG. Conclusions: A 6-month supervised group-based multicomponent exercise intervention improved the levels of mobility, functional balance, and HGS in frail institutionalized older adults. Further research will be required to evaluate the nutritional supplementation effects on functional performance to better determine its clinical applicability for tackling frailty.