One of the challenges faced by people with advancing age is decreased postural stability and increased risks for falls. There has been an increased interest over the last decade in using Tai Chi as an intervention exercise for improving postural balance and preventing falls in older people. Despite the increased number of studies in recent years relating Tai Chi to balance and fall prevention, results are scattered and inconsistent. There is wide variation in the use of balance measures, subject population, type and duration of Tai Chi exercise, and type of study. This paper provides a systematic review/analysis of currently available study reports. The goal of the review is to address the following concerns: how the effect of Tai Chi on balance or fall prevention has been evaluated to date, what level of evidence exists supporting Tai Chi as an effective exercise for improving balance or preventing falls, and what factors could possibly affect the benefit of Tai Chi on balance or falls. This review also helps identify directions for future research.