Background Falls are a major public health concern with at least one third of people aged 65 years and over falling at least once per year, and half of these will fall repeatedly, which can lead to injury, pain, loss of function and independence, reduced quality of life and even death. Although the causes of falls are varied and complex, the age-related loss in muscle power has emerged as a useful predictor of disability and falls in older people. In this population, the requirements to produce explosive and rapid movements often occurs whilst simultaneously performing other attention-demanding cognitive or motor tasks, such as walking while talking or carrying an object. The primary aim of this study is to determine whether dual-task functional power training (DT-FPT) can reduce the rate of falls in community-dwelling older people. Methods/Design The study design is an 18-month cluster randomised controlled trial in which 280 adults aged ≥65 years residing in retirement villages, who are at increased risk of falling, will be randomly allocated to: 1) an exercise programme involving DT-FPT, or 2) a usual care control group. The intervention is divided into 3 distinct phases: 6 months of supervised DT-FPT, a 6-month 'step down' maintenance programme, and a 6-month follow-up. The primary outcome will be the number of falls after 6, 12 and 18 months. Secondary outcomes will include: lower extremity muscle power and strength, grip strength, functional assessments of gait, reaction time and dynamic balance under single- and dual-task conditions, activities of daily living, quality of life, cognitive function and falls-related self-efficacy. We will also evaluate the cost-effectiveness of the programme for preventing falls. Discussion The study offers a novel approach that may guide the development and implementation of future community-based falls prevention programmes that specifically focus on optimising muscle power and dual-task performance to reduce falls risk under 'real life' conditions in older adults. In addition, the 'step down' programme will provide new information about the efficacy of a less intensive maintenance programme for reducing the risk of falls over an extended period. Trial registration Australian New Zealand Clinical Trials Registry: ACTRN12613001161718 webcite. Date registered 23 October 2013.