Background: Despite the fact that aquatic exercise is one of the most popular alternative treatment methods for children with cerebral palsy (CP), there are few research regarding its effectiveness. Objects: The purpose of this study was to examine the effects of aquatic exercise on upper extremity function and postural control during reaching in children with CP. Methods: Ten participants (eight males and two females; 4–10 years; Gross Motor Function Classification System levels II–IV) with spastic diplegia were recruited to this study. The aquatic exercise program consisted of four modified movements that were selected from the Halliwick 10-point program to enhance upper extremity and trunk movements. The participants attended treatment two times a week for 6 weeks, averaging 35 minutes each session. The Box and Block Test (BBT), transferring pennies in the Bruininks-Oseretsky Test (BOT), and pediatric reaching test (PRT) scores were used as clinical measures. Three-dimensional motion analysis system was used to collect and analyze kinematic data. Differences in BBT and BOT values among pre-treatment, post-treatment, and retention (after 3 weeks) were analyzed using a Friedman test. In addition, the PRT scores and variables (movement time, hand velocity, straightness ratio, and number of movement units) from the three-dimensional motion analysis were tested using a Wilcoxon signed-rank test. The significance level was established at p < 0.05. When the results appeared to be statistically significant, a post-hoc test for multiple comparisons was performed with the Wilcoxon signed-rank test. Results: All clinical measures, which included BBT, transferring pennies of BOT, and PRT, were significantly increased between pre-intervention and post-intervention scores and between pre-intervention and retention scores after treatment (p = 0.001). Three-dimensional motion analysis mostly were significantly improved after treatment (p = 0.001). Conclusion: Aquatic exercise may help to improve body function, activity, and participation in children with varying types of physical disabilities.