Objective To model the population level impact of tai-chi on future rates of falls and fall-related injury in older people as a tool for policy development. Design An epidemiological and economic model for estimating population-level effectiveness of tai-chi. Setting Australia, 2009. Patients or subjects Australian community-dwelling population aged 70+ years, ambulatory and without debilitating conditions or profound visual defects. Intervention Group-based tai-chi, for 1 h twice weekly for 26 weeks, assuming no sustained effect beyond the intervention period. Main outcome measure Total falls and fall-related hospitalisation prevented in 2009. Results Population-wide tai-chi delivery would prevent an estimated 5440 falls and 109 fall-related hospitalisations, resulting in a 0.18% reduction in the fallrelated hospital admission rate for community-dwelling older people. The gross costs per fall and per fall-related hospital admission prevented were $A4414 (€3013) and $A220712 (€150 684), respectively. A total investment of $A24.01 million (€16.39 million), equivalent to 4.2% of the cost of fall-related episodes of hospital care in 2003/4, would be required to provide tai-chi for 31 998 people and achieve this effect. Conclusions Substantial investment in, and high population uptake of, tai-chi would be required to have a large effect on falls and fall-related hospitalisation rates. Although not accounted for in this study, investment in tai-chi is likely to be associated with additional significant health benefits beyond falls prevention. This approach could be applied to other interventions to assist selection of the most costeffective falls-prevention portfolio for Australia and other countries.