Elderly people living in low-income housing facilities represent one of our nation's largest, most functionally impaired, economically disadvantaged, and understudied populations that account for a disproportionate share of Medicare spending. This revised competitive renewal application aims to improve the health and reduce the health care costs of this population by conducting a cluster randomized controlled trial of Tai Chi exercises vs. health education and social calls in 16 housing facilities in cities surrounding Boston. The proposal builds upon previously successful studies by Drs. Lipsitz, Wayne, and others showing multiple benefits of Tai Chi exercises in elderly people with a variety of diseases and disabilities. A randomized, controlled pilot study supported by the current R37 grant that this application seeks to renew, showed that 12 weeks of Tai Chi exercises tailored to the abilities of frail seniors living in supportive housing facilities can improve balance, gait, and physical function. The proposed study aims are to determine the effects of Tai Chi exercises conducted at least twice weekly over a 1 year period on 1) functional performance measured by the Short Physical Performance Battery and 2) health care utilization and costs determined from Medicare claims data in poor, multiethnic, elderly residents of low income housing facilities. Secondary outcomes will include person-centered measures such as physical function, cognition, psychological well-being, falls, self-efficacy, and satisfaction. We hypothesize that compared to the control intervention, Tai Chi will significantly improve physical function and reduce health care utilization and costs. This study will prepare the necessary training and protocol manuals for widespread dissemination of Tai Chi programs in housing facilities across the nation. It will also provide estimates of potential Medicare cost savings that can be used to justify future health insurance payments for this intervention. The previous experience of the Co-Principal Investigators and their colleagues at Harvard Medical School and Brandeis University in aging research, clinical trials, functional assessment, Medicare claims analyses, and Tai Chi interventions will help assure the project's success.