Aims: Regular physical activity (PA) is critical for children and young people's health and wellbeing. Schools are an important setting for promoting PA. This study aimed to examine prevalence of PA through physical education in New Zealand schools and the potential impact of increasing physical education on young people's PA levels., Methods: We used data from the Active NZ Young People Survey of over 8,000 young people and modelled the impact of a hypothetical intervention that increased school-based physical education time to 2.5 hours (consistent with international best practice) on the distribution of PA., Results: At baseline, 61.3% (95%UI 60.2-62.5) of young people were classified as being sufficiently active (7+ hours/week), 19.8% (95%UI 18.9-20.8) were moderately active, and 18.8% (95%CI 17.9-19.7) were minimally active. The intervention scenario would more than halve the prevalence of minimal activity to 8.1% (95%UI 7.5-8.8) and increase the proportion of sufficiently active young people to 68.4% (95%UI 67.3-69.5)., Conclusion: Increasing time being active through physical education has the potential to reduce the prevalence of minimally active young people in New Zealand. Policies to support increased physical education time, such as time-based requirements, would increase PA levels., Competing Interests: Sport NZ provided the funding for this study as part of a larger project and were responsible for collecting the data that was used in this study. Sport NZ staff members contributed to the analysis and interpretation of data and are included as co-authors (BL and JR). Dr Mizdrak reports grants from Sport New Zealand, during the conduct of the study. Dr Lynch reports being currently employed by Sport New Zealand, the government ministry responsible for physical activity.