Taiji (T'ai Chi) has been shown to have generally positive effects on functional balance. However, few studies have investigated the mechanisms by which Taiji may improve balance. The goal of this study was to evaluate changes in sensory and biomechanical balance mechanisms as a consequence of a traditional Taiji exercise program for healthy older adults that intentionally emphasized both Taiji forms and Qigong meditation. This was a randomized controlled trial with blind testers. Forty-nine healthy older adults (mean age 80.4, SD. 8.6) were randomized to participate in Taiji-Qigong (TQ) training (N=33) or a wait-list control group (WC, N=16). TQ instruction was provided 1 hour/session, 3 sessions a week for six months. Somatosensory, visual, and vestibular ratios of the Sensory Organization Test, and quiet stance Base of Support (BoS) and feet opening angle measures were collected prior to instruction (T0), at two months (T2), and six months (T6). TQ group vestibular ratio scores (normalized to T0) were +22% and +47% greater than WC at T2 and T6, respectively. The TQ group exhibited an increase in quiet stance BoS over time but not feet opening angle, indicating that the increase in BoS was due to the adoption of wider stances. Improved use of vestibular input and wider stances are two mechanisms by which Taiji-Qigong training may improve healthy older adults' balance. Further study is needed to evaluate other balance mechanisms and the individual and combined effects of different aspects of traditional Taiji practice.