Task-specific exercises such as bench stepping can improve functional ability and reduce falling incidents in older adults. However, such exercises are often not optimized to improve muscle volume and force-velocity characteristics. This study determined the effects of a 12-week stepping program using incremental step heights (STEEP), on muscle volume, strength, power, functional ability and balance performance in older women. Forty-five community-dwelling women (69y ± 4) were randomly assigned to the STEEP group or a non-training CONTROL group. Training intensity was primarily determined by step height, while training volume remained equal. Thigh muscle volume (CT-scan), force-velocity characteristics of the knee extensors (Biodex dynamometer) and functional ability (Short Physical Performance Battery, timed stair ascent, 10-m walk test and countermovement jump height) were determined pre- and post-intervention. In addition, 3D trunk accelerations were recorded at the lower back to assess balance during the Short Physical Performance Battery balance tests. Two-way ANOVA showed that the STEEP program increased thigh muscle volume, knee extensor isometric peak torque, dynamic peak power, unloaded rate of velocity development and improved performance on all functional tests to a greater extent than CONTROL (p < .05), except the countermovement jump. No improvements were found for peak velocity and balance performance (p > .05). Our results indicate that bench step training with incremental step heights simultaneously improves functional ability, thigh muscle volume and force-velocity characteristics of the knee extensors in older women.