Background: Nursing home residents are extremely inactive and deterioration in health and an increasing dependence in activities of daily living (ADL) are common. Physical activity and exercise play a major role in the preservation of physical function and quality of life late in life. However, evidence for the benefit of rehabilitation in nursing home residents is conflicting and inconclusive. Objective: To evaluate the effect of an individually tailored intervention program of 3 months, for nursing home residents, on ADL, balance, physical activity level, mobility and muscle strength. Methods: In this single-blind randomized clinical trial with parallel groups, nursing home residents >64 years of age from three Nordic countries were included. The intervention group (IG) was assigned to individually tailored physical and daily activities, while the control group (CG) received ordinary care. Primary outcomes were ADL and balance, and secondary outcomes physical activity level, mobility and muscle strength. Results: At baseline, 322 nursing home residents were included, of whom 266 were assessed after 3 months of intervention. Following the intervention, a significant difference was found between participants in the IG and CG on measures of balance, physical activity and transfers. The IG significantly improved walking/wheelchair speed and functional leg muscle strength. The CG had significantly deteriorated in ADL, balance and transfers. Persons who had taken part in the intervention for more than 150 min/week significantly improved their balance and physical activity level. Participation in more than 10 weeks of intervention significantly improved physical activity and walking/wheelchair speed, while a deterioration was seen in those who had participated less. Conclusion: Individually tailored intervention in nursing home residents focusing on physical and daily activities is effective in improving transfers, balance and physical activity level compared to usual care. The effect of the intervention is dependent on the total activity time.