Objective To determine the economic feasibility in Australian general practices of using a practice nurse (PN)-led care model of chronic disease management. Methods A cost-analysis of item numbers from the Medicare Benefit Schedule (MBS) was performed in three Australian general practices, one urban, one regional and one rural. Patients (n ≤254; >18 years of age) with chronic conditions (type 2 diabetes, hypertension, ischaemic heart disease) but without unstable or major health problems were randomised into usual general practitioner (GP) or PN-led care for management of their condition over a period of 12 months. After the 12-month intervention, total MBS item charges were evaluated for patients managed for their stable chronic condition by usual GP or PN-led care. Zero-skewness log transformation was applied to cost data and log-linear regression analysis was undertaken. Results There was an estimated A$129 mean increase in total MBS item charges over a 1-year period (controlled for age, self-reported quality of life and geographic location of practice) associated with PN-led care. The frequency of GP and PN visits varied markedly according to the chronic disease. Conclusions Medicare reimbursements provided sufficient funding for general practices to employ PNs within limits of workloads before the new Practice Nurse Incentive Program was introduced in July 2012. What is known about the topic? The integration of practice nurses (PN) into the Australian health system is limited compared with the UK and other parts of Europe. There are known patient benefits of PNs collaborating with general practitioners, especially in chronic disease management, but the benefits from a financial perspective are less clear. What does this paper add? The cost-analysis of a PN-led model of chronic disease management in Australian general practice is reported, providing an indication of the financial impact of using PNs in primary healthcare. What are the implications for practitioners? Taking into account general practice and individual PN workloads, sufficient funding for employment of PNs is provided by Medicare reimbursements.