Background An alarmingly high proportion of the Australian adult population does not meet the National Physical Activity (PA) recommendations. This is a concern given the well-established evidence of a causal association between PA with chronic diseases. In recent years an increasing emphasis has been placed on the potential for transport and urban planning to contribute to increased PA and improve air quality. In this study we aim to estimate the potential health gains and savings in health care costs of an Australian city achieving its proposed travel targets for the use of active transport and public transit by 2026. Methods A mode share of 14% for public transport, 15% walking, 5% cycling and 66% private motor-vehicle was proposed for the travel targets. We used survey data for the city of Brisbane in Australia to estimate the additional minutes of walking, cycling and walking for public transport per adult per week for the hypothetical scenario of achieving proposed travel targets. A multi-state life table model was used to estimate the number of health adjusted life years (HALYs) and the health care costs associated with changes in physical activity, air pollution (fine particles with a diameter of 2.5 μm or less (PM2.5)) and road trauma attributable to a shift from motorised travel to walking, cycling and public transport. Sensitivity analyses were used to test assumptions made. Results Over the life course of the Brisbane adult population in 2013 (860,000) slightly over 37 thousand HALYs could be gained if the proposed travel targets were achieved by 2026. We also estimated gains in life years at 33 thousands. We calculated that significant savings (A$ 323 million, 2013 values) in health care costs could be accrued from reductions in physical activity and PM2.5 related diseases and road trauma. However, increase in life years would translate into additional health care costs of diseases and injuries not included in the model of A$149 million. Conclusions In cities such as Brisbane, where over 80% of trips are made by private motor-vehicles, shifts towards more sustainable modes such as walking, cycling and public transport would translate into health and environmental benefits. However, for changes in modes to take place the right investments needs to take place to ensure safe and convenient travel.