In 1994 Brazil launched what has since become the world’s largest community-based primary health care program. Under the Family Health Program, teams consisting of at least one physician, one nurse, a medical assistant, and four to six trained community health agents deliver most of their services at community-based clinics. They also make regular home visits and conduct neighborhood health promotion activities. This study finds that during 1999–2007, hospitalizations in Brazil for ambulatory care–sensitive chronic diseases, including cardiovascular disease, stroke, and asthma, fell at a rate that was statistically significant and almost twice the rate of decline in hospitalizations for all other causes. In municipalities with high Family Health Program enrollment, chronic disease hospitalization rates were 13 percent lower than in municipalities with low enrollment, when other factors were held constant. These results suggest that the Family Health Program has improved health system performance in Brazil by reducing the number of potentially avoidable hospitalizations