The purpose of this study was to examine the relationships among exercise behavior, the ability to live independently as assessed by functional activities of daily living (ADL), and psychological health as measured by the Philadelphia Geriatric Center morale scale, using data from 202 elderly residents aged 70 and living in their own home. The main results obtained from the analysis were as follows. 1. Exercise behavior had a significant effect on functional ADL. In particular, subjects who had been exercising regularly for 6 months or longer had higher functional ADL than subjects who did not exercise. 2. For psychological health, the functional ADL level was statistically significant, whereas exercise behavior was not. 3. Multiple regression analysis showed a positive and significant association between psychological health and functional ADL, but not between psychological health and exercise behavior, gender or family type. The results of this study demonstrated that elderly people's efforts to maintain and enhance their psychological health play important roles in their ability to live independently, and that regular exercise is necessary to an elderly person's ability to live independently.