This study was to assess the level of acceptance and efficacy of a group tele-exercise program designed for balance impaired elders to improve balance and reduce fear of falling. The program would allow a group of elderly subjects to participate in a structured, interactive, and supervised exercise class from their own homes through a videoconferencing system. A total of 17 independent living elderly subjects (mean age, 81 +/- 8 years) participated in the study. An Internet-based videoconferencing device (VCD) was installed in each subject's home, allowing real-time video and audio communication with the exercise instructor and all other participants. The exercise was in the form of Tai Chi Quan, three times per week for 15 weeks. The main study measures included exercise compliance, level of acceptance and satisfaction, and the effectiveness of the exercise program on balance, fear of falling, and general health. Three subjects dropped out of the study. For those remaining, the average compliance was 78% (range, 51% to 98%). All subjects were able to operate the VCD independently, and expressed earnest interest in continuing tele-exercise programs in the future. There were significant improvement (p < 0.05) postexercise in fear of falling score (18%), single leg stance time (43%), Up-and-Go time (21%), and body sway during quiet stance (>8%). This study has demonstrated that the group tele-exercise program is acceptable and welcomed by elders, and is effective for improving balance and reducing fear of falling.