Background: Aging is an inevitable developmental phenomenon. As a person ages, possibility of problems multiply. Psychological wellbeing is the basic requisite for the healthy life of the elderly. Recent years have seen the prevalence of depression and dementia. The bodys natural relaxation response is a powerful antidote to stress. Relaxation techniques such as deep breathing, visualization, progressive muscle relaxation, music, physical exercise, meditation and yoga can help to activate the relaxation response. Objective: To assess the effect of relaxation therapy on psychological variables among elderly in selected homes for the aged. Materials and Methods: True experimental pre-test, post-test design. 120 elderly clients from 12 old age homes were selected by stratified proportionate random sampling technique(Control:60 Experimental:60). Pre test was done with Demographic data sheet, Psychological problem assessment questionnaire (PPAQ), and DASS 21 for Control and Experimental group. Control group had their normal routines, whereas exp group had Jacobsons progressive muscle relaxation technique (JPMR), music, physical exercise and laughter therapy.Posttest was done on 30th day and 120th Data analysis and interpretation was done by descriptive and inferential statistics. Results: The study showed the effectiveness of relaxation therapy on psychological problems among elderly people in control and experimental groups at < 0.001 respectively which was statistically significant. There was also effectiveness of relaxation therapy on depression, anxiety and stress at < 0.001 respectively.