OBJECTIVES: To investigate whether a 12-week physical and cognitive exercise program can improve cognitive function and brain activation efficiency in community-dwelling older adults. DESIGN: Randomized controlled trial. SETTING: Kyoto, Japan. PARTICIPANTS: Community-dwelling older adults (N = 48) were randomized into an exercise group (n = 24) and a control group (n = 24). INTERVENTION: Exercise group participants received a weekly dual task-based multimodal exercise class in combination with pedometer-based daily walking exercise during the 12-week intervention phase. Control group participants did not receive any intervention and were instructed to spend their time as usual during the intervention phase. MEASUREMENTS: The outcome measures were global cognitive function, memory function, executive function, and brain activation (measured using functional magnetic resonance imaging) associated with visual short-term memory. RESULTS: Exercise group participants had significantly greater postintervention improvement in memory and executive functions than the control group (P < .05). In addition, after the intervention, less activation was found in several brain regions associated with visual short-term memory, including the prefrontal cortex, in the exercise group (P < .001, uncorrected). CONCLUSION: A 12-week physical and cognitive exercise program can improve the efficiency of brain activation during cognitive tasks in older adults, which is associated with improvements in memory and executive function.