Chronic obstructive pulmonary disease (COPD) imposes a costly burden on healthcare. Pulmonary rehabilitation (PR) is the best practice to better manage COPD to improve patient outcomes and reduce acute hospital care utilization. To evaluate the impact of a once-weekly, eight-week multidisciplinary PR program as an integral part of the COPD chronic disease management (CDM) Program at Kyabram District Health Services. The study compared two cohorts of COPD patients: CDM-PR Cohort (4-8 weeks) and Opt-out Cohort (0-3 weeks) between February 2006 and March 2007. The CDM-PR Program involved multidisciplinary patient education and group exercise training. Nonparametric statistical tests were used to compare acute hospital care utilization 12 months before and after the introduction of CDM-PR. The number of patients involved in the CDM-PR Cohort was 29 (n = 29), and that in the Opt-out Cohort was 24 (n = 24). The CDM-PR Cohort showed significant reductions in cumulative acute hospital care utilization indicators (95% emergency department presentations, 95% inpatient admissions, 99% length of stay; effect sizes = 0.62-0.66, P < 0.001) 12 months after the introduction of the CDM Program; in contrast, changes in the cumulative indicators were statistically insignificant for the Opt-out Cohort (emergency department presentations decreased by 5%, inpatient admissions decreased by 12%, length of stay increased by 30%; effect size = 0.14-0.40, P > 0.05). Total costs associated with the hospital care utilization decreased from $130,000 to $7,500 for the CDM-PR Cohort and increased from $77,700 to $101,200 for the Opt-out Cohort. Participation in the CDM-PR for COPD patients can significantly reduce acute hospital care utilization and associated costs in a small rural health service.