OBJECTIVE: To evaluate the replacement of Western Australian tobacco sponsorship with health promotion sponsorship by the Western Australian Health Promotion Foundation (known as "Healthway"), following the Tobacco Control Act 1990. DESIGN: Process measures of performance were collected from 25 tobacco replacement projects (sponsorship by Healthway of sport, racing, and arts groups previously supported by tobacco companies) and 727 other health sponsorship projects, that is, new sponsorship provided by Healthway to these groups. Cross-sectional survey data were obtained from 917 respondents at tobacco replacement and 2352 at other sponsorship venues. SETTING: Sport, racing, and arts venues sponsored by the Western Australian Health Promotion Foundation (Healthway) in 1991-95. MAIN OUTCOME MEASURES: Population reach, occasions of media publicity, healthy structural changes, cognitive/attitudinal impact of health messages, and the prevalence of five health-risk behaviours. RESULTS: Tobacco replacement and other sponsorship projects achieved comparable performance in publicity for health messages and in healthy structural change, but replacement projects achieved a fourfold higher level of direct population reach for a given amount of funding. Structural change towards a smoke-free environment occurred more often in tobacco replacement projects and a permanent smoke-free policy was achieved in 47% of projects, compared with 15% in other sponsorship projects. The prevalence ratio of current smoking at tobacco replacement venues was 1.86 (95% confidence interval 1.62 to 2.04) relative to other sponsorship venues. There was evidence of higher cognitive resistance to health messages at venues previously sponsored by tobacco companies. CONCLUSIONS: A comprehensive ban on tobacco sponsorship linked to health promotion activities funded by tobacco tax delivers potential public health benefits that exceed those achieved by prohibition of tobacco sponsorship alone. Tobacco replacement venues offer opportunities for environmental modification, promotion of anti-smoking messages, and targeting groups that are hard to reach.