Background: Although footwear has been linked to falls in older people, it remains unclear as to which shoe features are beneficial or detrimental to balance in older people. Objective: To systematically investigate how footwear features affect balance and stepping in older people. Methods: 29 community-dwelling people (mean (SD) age, 79.1 (3.7) years) undertook tests of postural sway, maximal balance range, coordinated stability and choice-stepping reaction time in a standard shoe and seven other shoes that differed from the standard shoe in one feature only, namely: elevated heel (4.5 cm), soft sole, hard sole, flared sole, bevelled heel, high heel-collar and tread sole. Results: Repeated-measures ANOVA with simple contrasts revealed significantly increased sway in the elevated heel versus the standard shoe condition (p < 0.05). A footwear performance index based on the sum of z-scores across three tests (sway, coordinated stability and choice-stepping reaction time) normalized to the standard condition indicated that the elevated heel was most detrimental to balance (p < 0.05) whereas a high heel-collar and a hard sole showed trends towards being beneficial. Conclusion: An elevated heel of only 4.5 cm height significantly impairs balance in older people. The potential benefits of wearing shoes with a hard sole or a high heel-collar on balance in older people warrant further research in ambulatory tasks.