The aim of this paper is to examine the association of physical inactivity with incidence of obesity in the South Australian adult population. Two representative data sources were used – the South Australian Monitoring and Surveillance System (SAMSS), a monthly surveillance system, and the North West Adelaide Health Study (NWAHS), a biomedical cohort study. There were 75.3% (n = 12873) SAMSS participants and 72.8% (n = 1521) of NWAHS participants that were not obese at baseline. The cumulative incidence of obesity for SAMSS participants from the previous year to the current year was 2.7%. The cumulative incidence of obesity for NWAHS participants between baseline and stage 3 was 14.4%. Physical inactivity was associated with incident obesity (RR 1.48, 95% CI 1.14–1.90 [SAMSS] and RR 1.41, 95% CI 1.03–1.93 [NWAHS]). This association remained, but was attenuated after adjustment for chronic conditions, risk factors and socio-demographic factors. However, physical activity should be continued to be encouraged in the population for its known additional health benefits.