OBJECTIVE To evaluate the influence of exercise on falls and fall risk reduction in community-dwelling older adults and to present an updated synthesis of outcome measures for the assessment of fall risk in community-dwelling older adults. METHODS A systematic review was performed, considering English-language articles published from 2000 to 2006 and accessible through MEDLINE, CINAHL, PEDro, EMBASE, and/or AMED. Included were randomized controlled clinical trials (RCTs) that used an exercise or physical activity intervention and involved participants over age 50. Screening and methodological quality for internal validity were conducted by two independent reviewers. RESULTS The search retrieved 156 abstracts; 22 articles met the internal validity criteria. Both individualized and group exercise programmes were found to be effective in reducing falls and fall risk. The optimal type, frequency, and dose of exercise to achieve a positive effect have not been determined. A variety of outcome measures have been used to measure fall risk, especially for balance. CONCLUSIONS Falls and fall risk can be reduced with exercise interventions in the community-dwelling elderly, although the most effective exercise variables are unknown. Future studies in populations with comorbidities known to increase fall risk will help determine optimal, condition-specific fall-prevention programmes. Poor balance is a key risk factor for falls; therefore, the best measure of this variable should be selected when evaluating patients at risk of falling.