Approximately 30% of elderly community dwellers fall each year. A large number of exercisebased interventions have been designed to reduce fall incidence, the movement therapy of Tai Chi being used increasingly. The aim of this systematic review was to examine the current literature surrounding the effectiveness of Tai Chi in reducing the incidence of and fear of falling in older people. A computerised literature search of Medline, AMED, CINAHL, the Cochrane Central Register of Controlled Trials, PubMed, PEDro and Scirus was performed. Only randomised controlled trials, with a study population aged over 60 years, investigating Tai Chi as an intervention to reduce incidence of falls and/or fear of falling were included. The methodological quality of the included trials was rated using the Delphi List. Owing to clinical heterogeneity, the data were qualitatively analysed using a 'best-evidence synthesis'. Seven randomised controlled trials involving a total of 1146 people met the inclusion criteria. The duration, frequency and intensity of the Tai Chi interventions showed great variation. The trials included were of high methodological quality. There is strong evidence to support the effectiveness of Tai Chi in reducing fear of falling, and weak evidence supporting its effectiveness in reducing the incidence of falls in older adults. Future research should focus on targeting defined clinical subpopulations with high-quality, well-designed randomised controlled trials of sufficient size and with long-term follow-up, to provide further evidence supporting the use of Tai Chi to reduce the incidence and fear of falling in older people.