Community participation and action are important foundations of public health. The objective of this study was to identify characteristics of resident action groups in metropolitan Sydney which predict achievement of a group's objectives and higher group potency. A stratified random sample of 32 groups registered with local councils surveyed in 1997 were followed up two years later. Measures of community empowerment (assessed by the achievement of a group's objectives and higher group potency) were linked with aggregated baseline group data. Of the 32 groups that provided baseline data, 21 (66%) were still meeting two years after initial contact. Group potency was negatively associated with the mean number of activities with which groups were involved (p = O.04). A higher level of mean perceived benefits (p = O.02), and a higher ratio of benefits to cost (p = O.04) were positively associated with group potency. Success in achieving group objectives was positively associated with higher baseline group potency (p = O.03), higher baseline achievement of success (p<O.01), and higher baseline expectations of success (p = O.04). The lower the proportion of meetings attended, the more likely the group's objectives were to have been achieved (p = O.05). These findings suggest that quality of participation may be more important than amount of participation for community empowerment. A larger study is needed to better identify the inter-relationships of key aspects of participation and community empowerment.