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Background The older person is at greater risk of falls due to multiple intrinsic and extrinsic factors. This is compounded when the elderly is admitted to hospitals, as they are acutely ill and placed in an unfamiliar environment. Delirium and polypharmacy further complicate these problems. As falls reflect quality of care with potential for grave outcomes, this study aimed to identify the extent and risk of falls in public hospitals. Methods We conducted a nested case control study in 12 public hospitals in Malaysia. In the cohort section, we screened all inpatients 60 years of age and above daily until discharge, or the end of the study period. Daily, we identified those who fell, inclusive of near falls, in the preceding 24 h. Our enumerators interviewed patients on experience of fall, and supplemented data from the nurses and caregivers. For each case, ten controls were chosen. Results The incidence of falls/near falls was 1.0 per 1000 patient days (95% CI: 0.9, 1.1). Intrinsic risk factors found to be significant included patients who were not from a nursing home or not cared for by a domestic helper prior to admission, had prior history of indoor fall either in home or hospital, had four or more clinical diagnoses or exited from the bed on the weak side. Significant extrinsic factors were the absence of transfer bar in toilet, call bells, light switches or walking aids that were not within reach, as well as not having a walking aid. Non-sturdy chair was associated with lesser falls than when sturdy chairs with armrests were present. Conclusion Querying patients for falls produced better results than incident reporting. Several intrinsic factors such as history of indoor or in-hospital fall, having four or more clinical diagnoses or exiting from weaker side and residence history may help to identify those at higher risk. Addressing significant extrinsic factors such as transfer bars and the identification of switches may help in reducing falls risk in hospitals. Trial registration This study was registered in National Medical Research Register of Malaysia (NMRR-07-772-1044; date 26/05/2008) with Ethics Approval from Medical Research and Ethics Committee (MREC: MRG-07-LOI-HSR-1).