The aim of this study was to assess the direct and indirect effects of a multicomponent exercise (MCE) program on mobility and balance in institutionalized older people. One hundred and twelve subjects (85 women; 83.0 years on average; SD = 7.5) were included in the study, and divided into a MCE-group (MCE-G) and a control group (CG) according to matching techniques. The MCE-G consisted of a 9-month program featuring range-of-motion, strength, and balance exercises performed in small groups. The CG received routine medical and nursing care. The timed up-and-go test and Tinetti Performance-Oriented Mobility Assessment balance subscale were administered at baseline and postintervention. After controlling for physical baseline value, age, sex, residential care facilities, and body mass index, the MCE-G showed positive effects both on mobility (p < .001) and balance (p = .001). The role of balance as mediator in the relationship between participation to the MCE program and mobility was demonstrated.