In Australia, primary care-based funding initiatives have been implemented to encourage general practices to employ practice nurses. The aim of this paper is to discuss limitations of the current funding and policy arrangements in enhancing the clinical role of practice nurses in the management of chronic conditions. This paper draws on the results of a real-world economic evaluation, the Primary Care Services Improvement Project (PCSIP). The PCSIP linked routinely collected clinical and resource use data to undertake a risk-adjusted cost-effectiveness analysis of increased practice nurse involvement in clinical-based activities for the management of diabetes and obesity. The findings of the PCSIP suggested that the active involvement of practice nurses in collaborative clinical-based activities is cost-effective, as well as addressing general practice workforce issues. Although primary healthcare organisations (e.g. Medicare Locals) can play a key role in supporting enhanced practice nurse roles, improvements to practice nurse funding models could further encourage more efficient use of an important resource.