Osteoarthritis (OA) exacerbates skeletal muscle functioning, leading to postural instability and increased falls risk. However, the link between impaired physical function, OA and falls have not been elucidated. We investigated the role of impaired physical function as a potential mediator in the association between OA and falls. This study included 389 participants [229 fallers (≥2 falls or one injurious fall in the past 12 months), 160 non-fallers (no history of falls)], age (≥65 years) from a randomized controlled trial, the Malaysian Falls Assessment and Intervention Trial (MyFAIT). Physical function was assessed using Timed Up and Go (TUG) and Functional Reach (FR) tests. Knee and hip OA were diagnosed using three methods: Clinical, Radiological and Self-report. OA symptom severity was assessed using the Western Ontario and McMaster Universities Arthritis Index (WOMAC). The total WOMAC score was categorized to asymptomatic, mild, moderate and severe symptoms. Individuals with radiological OA and 'mild' overall symptoms on the WOMAC score had reduced risk of falls compared to asymptomatic OA [OR: 0.402(0.172-0.940), p = 0.042]. Individuals with clinical OA and 'severe' overall symptoms had increased risk of falls compared to those with 'mild' OA [OR: 4.487(1.883-10.693), p = 0.005]. In individuals with radiological OA, mild symptoms appear protective of falls while those with clinical OA and severe symptoms have increased falls risk compared to those with mild symptoms. Both relationships between OA and falls were not mediated by physical limitations. Larger prospective studies are needed for further evaluation.