Objective: To determine the effects of an exercise intervention on physical performance and reported fall incidents among individuals living with dementia in nursing homes. Methods: The study was a randomized controlled trial to determine the effect of the physical activity on physical performance and reported fall incidents. A sample of 60 participants from two nursing homes in Australia were randomly allocated to either: (1) Intervention Group 1: physical exercise intervention for 45 min, once a week; (2) Intervention Group 2: physical exercise intervention for 15 min, three times a week; or (3) usual care Control Group. Physical performance was assessed before and after the intervention (12 weeks) using: Six Meter Walk test, Five-Times-Sit-to-Stand test, Timed Up and Go (TUG) test, (Modified) Functional Reach test, timed static pedaling (TSP). The number of reported falls was determined by review of incident reports completed by nursing home staff. Results: The physical performance outcome measures demonstrated positive trends over time in favor of the intervention groups, though the observed changes were only statistically significant for TSP and TUG Test. The number of reported falls demonstrated a significant difference between groups during the intervention period. Conclusions: The results demonstrated that the physical exercise intervention could be beneficial for individuals living with dementia, and as little as 45 min per week could be effective for this population group. However, cautious interpretation was drawn as the pool of participants was not sufficiently large enough to generate a meaningful effect size.