There are a range of priority setting methods for non-communicable disease (NCDs) prevention. However, existing methods are often designed without detailed consideration of local context and political economy– critical success factors for implementation. In Australia, codes of practice under state government Public Health Acts could be used for NCD prevention. To inform the potential development of codes of practice under Public Health Acts, this study aimed to co-create a priority setting framework that accounts for local context and the prevailing regulatory agenda. A priority setting framework was co-produced by a multidisciplinary technical advisory group consisting of government representatives, public health lawyers and academic experts. It incorporated general prioritisation criteria (evidence, cost-effectiveness, equity, burden of disease) and local contextual criteria (legal compatibility, unmet-needs, political acceptability, structural and technical feasibility, community support). The framework was then applied in practice through surveys and policy dialogue workshops to discuss political economy factors. Policies were limited to nutrition, alcohol and physical activity risk factors. Through the prioritisation process, the most impactful, feasible and acceptable policies for NCD prevention via state government codes of practice were: restrictions on in-store placement of unhealthy products, enhancing data systems and capabilities for health surveillance and implementation monitoring, removal of unhealthy foods and drinks sold and supplied in public institutions, prohibition of marketing of unhealthy foods and drinks on assets controlled by government, and implementation of subsidies or grants to increase fruit and vegetable intake. The process illustrated that explicit consideration of local context, legal compatibility and the political economy had a substantial influence on the prioritised list of actions. The proposed priority setting framework is designed to be flexible and adaptable to varying contexts, can be embedded in government processes or utilised by researchers and practitioners to co-produce a regulatory agenda that is locally relevant.