Supervised, hospital-based exercise rehabilitation programs are effective for improving functional status for patients with claudication due to peripheral arterial occlusive disease. However, it has been suggested that unsupervised, home-based exercise programs, which have been relatively little evaluated, would be equally efficacious as compared with hospital-based programs. The authors tested the hypothesis that a hospital-based exercise rehabilitation program would improve treadmill exercise performance more than a home-based program. Of 20 consecutively enrolled patients with claudication, 10 were randomly placed into a supervised, hospital-based program and 10 into an unsupervised, home-based program for a three-month period. Exercise performance was evaluated by treadmill testing using a graded protocol. In addition, functional status was evaluated by the Walking Impairment Questionnaire (WIQ) and the Medical Outcomes Study SF-20 questionnaire (MOS). Patients in the hospital-based program were treated with treadmill walking three times a week for one hour/visit. Patients in the home-based program were instructed to walk at least three times a week and were contacted weekly to provide encouragement and to record compliance with the program. Patients in the hospital-based group improved peak walking time by 137%, pain-free walking time by 150%, and peak oxygen consumption by 19% (all P < 0.05). Patients reported an improved walking distance and speed according to WIQ data (both P < 0.05). In addition, the MOS physical functioning score in the hospital-based group improved by 20 percentage points (P < 0.05). In contrast, patients in the home-based program did not improve exercise performance measured on the treadmill. Improvement in the ability to walk on the treadmill was greater in the hospital-based than the home-based program (P < 0.05). The ability to walk distances was the only questionnaire measure that improved in persons who received the home-based program (P < 0.05). Preliminary results suggest that a supervised, hospital-based program is more effective for improving treadmill exercise performance than an unsupervised, home-based program.