Osteoarthritis (OA) is the most common form of arthritis in the United States, affecting 21 million older people. Symptomatic knee OA in the elderly is one of the most frequent causes of loss of independence and physical disability. There are currently no satisfactory pharmacological or non-pharmacological therapies for knee OA. New strategies to improve functional capacity, quality of life and reduce long-term disability in people with knee OA are urgently needed. Our long-term goal is to demonstrate the physical and psychological benefits of Tai Chi exercise as a complementary treatment for people with knee OA. Tai Chi is a traditional Chinese discipline with both physical and mental components that appear to benefit a variety of conditions. The physical component provides exercise that is consistent with recommendations for OA (range of motion, flexibility, muscle conditioning and aerobic cardiovascular exercise), while the mental component has the potential to increase psychological well-being, life satisfaction, and perceptions of health. These effects are especially pertinent for the treatment of older adults with knee OA.