Abstract Background Physical activity (PA) is associated with positive cardio-metabolic health and emerging evidence suggests sedentary behavior (SB) may be detrimental to children's health independent of PA. The primary aim of the Transform-Us! study is to determine whether an 18-month, behavioral and environmental intervention in the school and family settings results in higher levels of PA and lower rates of SB among 8-9 year old children compared with usual practice (post-intervention and 12-months follow-up). The secondary aims are to determine the independent and combined effects of PA and SB on children's cardio-metabolic health risk factors; identify the factors that mediate the success of the intervention; and determine whether the intervention is cost-effective. Methods/design A four-arm cluster-randomized controlled trial (RCT) with a 2 × 2 factorial design, with schools as the unit of randomization. Twenty schools will be allocated to one of four intervention groups, sedentary behavior (SB-I), physical activity (PA-I), combined SB and PA (SB+PA-I) or current practice control (C), which will be evaluated among approximately 600 children aged 8-9 years in school year 3 living in Melbourne, Australia. All children in year 3 at intervention schools in 2010 (8-9 years) will receive the intervention over an 18-month period with a maintenance 'booster' delivered in 2012 and children at all schools will be invited to participate in the evaluation assessments. To maximize the sample and to capture new students arriving at intervention and control schools, recruitment will be on-going up to the post-intervention time point. Primary outcomes are time spent sitting and in PA assessed via accelerometers and inclinometers and survey. Discussion To our knowledge, Transform-Us! is the first RCT to examine the effectiveness of intervention strategies for reducing children's overall sedentary time, promoting PA and optimizing health outcomes. The integration of consistent strategies and messages to children from teachers and parents in both school and family settings is a critical component of this study, and if shown to be effective, may have a significant impact on educational policies as well as on pedagogical and parenting practices. Trial registration ACTRN12609000715279 ; Current Controlled Trials ISRCTN83725066