Dementia is a common neurodegenerative condition in older age associated with functional decline across multiple domains. This decline impacts not only on the person with dementia, but also on their informal carers and health and aged care systems. With the number of people with dementia rapidly increasing and few effective treatments, there is now a critical need for interventions to improve functional ability in those with the condition.This study assesses the effectiveness of a community-based home exercise programme in improving cognitive and physical function and independence in activities of daily living (ADL) in people with Alzheimer's disease, the most common form of dementia.In a 4-month randomized controlled trial, 40 community-dwelling patients diagnosed with Alzheimer's disease and their informal carers were randomly allocated to either the treatment (exercise plus usual treatment) or control (usual treatment) group. The exercise programme consisted of daily exercises and walking under the supervision of their carer. Patients were assessed at baseline and 4-months follow-up by a blinded assessor on primary outcome measures of cognitive and physical function and ADL using standardized assessment scales.Sixteen men and 24 women diagnosed with Alzheimer's disease participated in the study. They had a mean age of 74.1 years (range 51-89) and a mean Mini Mental State Examination score of 22.0 (range 10-28), indicating mild to moderate dementia. At 4-months follow-up, patients who exercised, compared with controls, had improved cognition (increased Mini Mental State Examination scores by 2.6 points, p < 0.001), better mobility (2.9 seconds faster on Timed Up and Go, p = 0.004) and increased Instrumental Activities of Daily Living scores by 1.6 (p = 0.007).This study suggests that participation in a community-based exercise programme can improve cognitive and physical function and independence in ADL in people with Alzheimer's disease.© 2011 The Authors. Scandinavian Journal of Caring Sciences © 2011 Nordic College of Caring Science.