Foot problem assessments were performed on 135 community-dwelling older people in conjunction with clinical tests of balance and functional ability. Eighty-seven percent of the sample had at least one foot problem, and women had a higher prevalence than men of foot pain, hallux valgus, plantar hyperkeratosis, lesser digital deformity, and digital lesions. Postural sway did not differ between older people with and without each of these foot conditions. However, the presence of specific foot conditions impaired performance in a more challenging balance test and in some functional tests. In particular, older people with foot pain performed worse in a leaning balance test, stair ascent and descent, an alternate step-up test, and a timed six-meter walk. Furthermore, multiple regression analyses revealed that foot pain was a significant independent predictor of performance in each of these tests. These results show that the presence of foot problems, particularly foot pain, impairs balance and functional ability. As foot pain is amenable to treatment, podiatric intervention has the potential to improve mobility and independence in older people.