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. Design: Prospective, cluster randomised controlled trial, with general practices as the unit of randomisation. Setting: General practices in Victoria, Australia. Participants 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. Intervention: 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. Main outcome measures: 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.