Physical activity (PA) is increasingly considered an important public health issue and as such requires the development of good public health policy. This paper provides a summary of the literature on policy development and defines what a policy on PA may usefully comprise. The results of an international review of national level PA policies, using a defined set of criteria, are reported. Considerable similarities were found in the methods and approaches to policy development on PA across countries, with most adopting an intersectoral approach, with consultation and partnership between sectors occurring at a high level of government. The need for action across the lifespan is recognised, as is the need for multiple strategies across a variety of settings. A review of Australian PA policy found that, after promising strategic developments through Active Australia in the late 1990s, PA policy and the role of the federal health sector has become less clear, with PA policy existing now only as a component part integrated into other chronic disease prevention policy initiatives. Recommendations towards better practice in policy making are made with particular reference to developing a clearly defined integrated national PA policy in the Australian context.