Objective The aims of this study were to: (1) use local health data to examine potentially preventable hospitalisations (PPHs) as a proportion of total hospital separations and estimated costs to a large regional hospital in northern Queensland, including differences associated with Indigenous status; and (2) identify priority conditions and discuss issues related to strategic local primary health intervention. Methods A cross-sectional analysis was conducted using Queensland Hospital Admitted Patient Data Collection data (July 2012-June 2014) restricted to 51087 separations generated by 29485 local residents. PPHs were identified from the International Statistical Classification of Diseases and Related Health Problems 10th Revision Australian Modification (ICD-10-AM) and procedure codes using National Healthcare Agreement definitions. Age-standardised separation rates were calculated using Australian 2001 reference population and associated economic costs were estimated using Australian-refined diagnosis related groups. Results Eleven per cent (n=5488) of all hospital separations were classified as PPH, and most were for common chronic (n=2486; 45.3%) and acute (n=2845; 51.8%) conditions. Because many acute presentations reflect chronic underlying disease, chronic conditions account for up to 76.5% of all PPHs. Age-standardised PPH rates were 3.4-fold higher for Indigenous than non-Indigenous people. Associated 2-year costs were AU$32.7million, which was 10.7% of estimated total health care expenditure for hospital separations, and were higher for Indigenous (14.9%) than non-Indigenous (9.7%) people. Conclusions High hospitalisation rates and costs for common preventable chronic conditions represent opportunities for primary healthcare interventions. In particular, community-level health services need to be more responsive to the needs of local Indigenous families. What is known about the topic? PPH rates are used as a measure of timely access to quality primary health care, and are incrementally higher in regional and remote areas than in major cities. Investment in primary healthcare services has been shown to significantly reduce costs associated with avoidable hospitalisations. What does this paper add? This study used local health data to identify the most common PPH conditions presenting to a large regional hospital in northern Queensland, including estimation of costs and differences associated with Indigenous status. Recommendations are made to strengthen primary healthcare and reduce hospital-related costs. What are the implications for practitioners? Interventions to address high PPH rates should be tailored to meet the needs of the local population. Primary health strategies targeting common chronic conditions provide the greatest opportunity to reduce avoidable hospitalisations and costs in this regional area. Investment in collaborative, evidence-based interventions is recommended and justified, especially for Indigenous Australians.