Background: Home exercise can prevent falls in the general older community but its impact in people recently discharged from hospital is not known. The study aimed to investigate the effects of a home-based exercise program on falls and mobility among people recently discharged from hospital. Methods and Findings: This randomised controlled trial (ACTRN12607000563460) was conducted among 340 older people. Intervention group participants (n = 171) were asked to exercise at home for 15-20 minutes up to 6 times weekly for 12 months. The control group (n = 169) received usual care. Primary outcomes were rate of falls (assessed over 12 months using monthly calendars), performance-based mobility (Lower Extremity Summary Performance Score, range 0-3, at baseline and 12 months, assessor unaware of group allocation) and self-reported ease of mobility task performance (range 0-40, assessed with 12 monthly questionaries). Participants had an average age of 81.2 years (SD 8.0) and 70% had fallen in the past year. Complete primary outcome data were obtained for at least 92% of randomised participants. Participants in the intervention group reported more falls than the control group (177 falls versus 123 falls) during the 12-month study period and this difference was statistically significant (incidence rate ratio 1.43, 95% CI 1.07 to 1.93, p = 0.017). At 12-months, performance-based mobility had improved significantly more in the intervention group than in the control group (between-group difference adjusted for baseline performance 0.13, 95% CI 0.04 to 0.21, p = 0.004). Self-reported ease in undertaking mobility tasks over the 12-month period was not significantly different between the groups (0.49, 95% CI -0.91 to 1.90, p = 0.488). Conclusions: An individualised home exercise prescription significantly improved performance-based mobility but significantly increased the rate of falls in older people recently discharged from hospital. Trial Registration: Australian New Zealand Clinical Trials Registry ACTRN12607000563460.