Background: Decreased functional ability is common in older adults after hospitalisation. Lower levels of functional ability increase the risk of hospital readmission and nursing care facility admission. Discharge planning across the hospital and community interface is suggested to increase functional ability and decrease hospital length of stay and hospital readmission. However evidence is limited and the benefits of occupational therapists providing this service has not been investigated. This randomised trial will investigate the clinical effectiveness of a discharge planning program in reducing functional difficulties of older adults post-discharge. This trial will also examine the cost of the intervention and cost effectiveness when compared to in-hospital discharge planning. Methods/design: 400 participants admitted to participating hospitals will be recruited. Participants will be 70 years of age and over, have no significant cognitive impairment and be independently mobile at discharge. This study protocol was approved by the ethics committee of Ryde Rehabilitation Human Research Ethics Committee, Western Sydney Local Health District (Westmead Campus) Human Research Ethics Committee, Alfred Health Human Research ethics committee for the randomised trial and NSW Population and Health Service Human Research Ethics Committee for data linkage. Participants will provide informed written consent. Participants will be randomly allocated to the intervention or control group. The intervention group will receive discharge planning therapies primarily within their home environment while the control group will receive an in-hospital consultation, both provided by trained occupational therapists. Primary outcome measures will be the Nottingham Extended Activities of Daily Living Scale (NEADL) and the Late Life Disability Index (LLDI) which will measure functional independence, and participation and limitation in daily life activities. Discussion: This trial will investigate the effectiveness and cost effectiveness of occupational therapy discharge planning in reducing functional difficulties. Results will have a direct impact on healthcare practice and policy.