Background: Worldwide, type 2 diabetes (T2DM) prevalence has more than doubled over two decades. In Australia, diabetes is the second highest contributor to the burden of disease. Lifestyle modification programs comprising diet changes, weight loss and moderate physical activity, have been proven to reduce the incidence of T2DM in high risk individuals.As part of the Council of Australia Governments, the State of Victoria committed to develop and support the diabetes prevention program 'Life! Taking action on diabetes' (Life!) which has direct lineage from effective clinical and implementation trials from Finland and Australia. The Melbourne Diabetes Prevention Study (MDPS) has been set up to evaluate the effectiveness and cost-effectiveness of a specific version of the Life! program.Methods/design: We intend to recruit 796 participants for this open randomized clinical trial; 398 will be allocated to the intervention arm and 398 to the usual care arm. Several methods of recruitment will be used in order to maximize the number of participants. Individuals aged 50 to 75 years will be screened with a risk tool (AUSDRISK) to detect those at high risk of developing T2DM. Those with existing diabetes will be excluded. Intervention participants will undergo anthropometric and laboratory tests, and comprehensive surveys at baseline, following the fourth group session (approximately three months after the commencement of the intervention) and 12 months after commencement of the intervention, while control participants will undergo testing at baseline and 12 months only.The intervention consists of an initial individual session followed by a series of five structured-group sessions. The first four group sessions will be carried out at two week intervals and the fifth session will occur eight months after the first group session. The intervention is based on the Health Action Process Approach (HAPA) model and sessions will empower and enable the participants to follow the five goals of the Life! program.Discussion: This study will determine whether the effect of this intervention is larger than the effect of usual care in reducing central obesity and cardiovascular risk factors and thus the risk of developing diabetes and cardiovascular disease. Also it will evaluate how these two options compare economically.Trial registration: Australian New Zealand Clinical Trials Registry ACTRN12609000507280.