OBJECTIVE To evaluate the effectiveness of goal focused telephone coaching by practice nurses in improving glycaemic control in patients with type 2 diabetes in Australia. METHODS Prospective, cluster randomised controlled trial, with general practices as the unit of randomisation. METHODS General practices in Victoria, Australia. METHODS 59 of 69 general practices that agreed to participate recruited sufficient patients and were randomised. Of 829 patients with type 2 diabetes (glycated haemoglobin (HbA1c) >7.5% in the past 12 months) who were assessed for eligibility, 473 (236 from 30 intervention practices and 237 from 29 control practices) agreed to participate. METHODS Practice nurses from intervention practices received two days of training in a telephone coaching programme, which aimed to deliver eight telephone and one face to face coaching episodes per patient. METHODS The primary end point was mean absolute change in HbA1c between baseline and 18 months in the intervention group compared with the control group. RESULTS The intervention and control patients were similar at baseline. None of the practices dropped out over the study period; however, patient attrition rates were 5% in each group (11/236 and 11/237 in the intervention and control group, respectively). The median number of coaching sessions received by the 236 intervention patients was 3 (interquartile range 1-5), of which 25% (58/236) did not receive any coaching sessions. At 18 months' follow-up the effect on glycaemic control did not differ significantly (mean difference 0.02, 95% confidence interval -0.20 to 0.24, P=0.84) between the intervention and control groups, adjusted for HbA1c measured at baseline and the clustering. Other biochemical and clinical outcomes were similar in both groups. CONCLUSIONS A practice nurse led telephone coaching intervention implemented in the real world primary care setting produced comparable outcomes to usual primary care in Australia. The addition of a goal focused coaching role onto the ongoing generalist role of a practice nurse without prescribing rights was found to be ineffective. BACKGROUND Current Controlled Trials ISRCTN50662837.