Background: Balance impairment causes frequent falls in older adults, and preventing falls remains challenging. Dual-task (DT) training reduces falls by improving balance, but the precise theory is not fully understood. This review aims to explore the theories underlying the effectiveness of DT in improving balance and reducing falls in older adults. Methods: Eleven electronic databases were searched from database inception to June 2022. Two reviewers independently performed study screening and data extraction. The risk of bias (RoB) in the included studies was assessed using the Cochrane Collaboration RoB 2 tool. Results: The searches yielded 1478 citations, of which 30 studies met the inclusion criteria and were included in the review. Twenty-two of the 30 included studies utilized the motor-cognitive type of DT for training, while six used motor-motor and two utilized cognitive-cognitive DT. The included studies reported 20 different theories to explain the effectiveness of DT for improving balance and reducing falls in older adults. The predominant theory identified in the included studies was attention theory (n = 14). Overall, 26 studies reported improved balance and five studies found a reduction in fall incidence following DT training. Balance and falls improved significantly in 15 motor-cognitive DT intervention studies. Conclusion: Attention shifting between two tasks is reported to occur following DT training. Motor-cognitive DT training improves balance and reduces fall incidence in older adults by shifting attention based on the difficulty and priority of a task from the motor to the cognitive task.