Objective The aim of this study was to compare the effectiveness of supervised and unsupervised functional level-based exercises program for elderly inpatients on physical activity, mobility, health-related quality of life and depression status. Design A single-blinded randomised controlled trial. Setting Internal medicine service. Subjects Patients aged 65 years or older. Interventions A supervised functional level-based exercise program was applied to the intervention group by a physiotherapist, for 40 min 5 times a week during their hospitalisation. Patients in the control group were asked to perform an unsupervised functional level-based exercise program which was described by the physiotherapist during the first visit. Main measures Mobility, physical activity level and health-related quality of life were assessed at admission and discharge in both groups. Depression status was evaluated at admission and 3 months after discharge. Results Sociodemographic features between intervention group (n = 62) and control group (n = 62) were similar. The intervention group showed a higher increment in mobility, physical activity level and quality of life scores than the control group (d = 0.62, p < 0.05; d = 0.57, p < 0.05; d = 1.12, p < 0.05 respectively). Inpatients in the intervention group, depression scores were lower 3 months after discharge (d = 0.42, p < 0.05). The length of stay in the hospital was not different between the groups. Conclusions A supervised functional level-based exercise program is more effective than an unsupervised functional level-based exercise program for mobility, physical activity, depression and quality of life in elderly inpatients. These positive contributions are seen within a short period like a 5 to 10 days stay in hospital.