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Evaluating autonomous vehicle stacks (AVs) in simulation typically involves replaying driving logs from real-world recorded traffic. However… (see more), agents replayed from offline data do not react to the actions of the AV, and their behaviour cannot be easily controlled to simulate counterfactual scenarios. Existing approaches have attempted to address these shortcomings by proposing methods that rely on heuristics or learned generative models of real-world data but these approaches either lack realism or necessitate costly iterative sampling procedures to control the generated behaviours. In this work, we take an alternative approach and propose CtRL-Sim, a method that leverages return-conditioned offline reinforcement learning within a physics-enhanced Nocturne simulator to efficiently generate reactive and controllable traffic agents. Specifically, we process real-world driving data through the Nocturne simulator to generate a diverse offline reinforcement learning dataset, annotated with various reward terms. With this dataset, we train a return-conditioned multi-agent behaviour model that allows for fine-grained manipulation of agent behaviours by modifying the desired returns for the various reward components. This capability enables the generation of a wide range of driving behaviours beyond the scope of the initial dataset, including those representing adversarial behaviours. We demonstrate that CtRL-Sim can efficiently generate diverse and realistic safety-critical scenarios while providing fine-grained control over agent behaviours. Further, we show that fine-tuning our model on simulated safety-critical scenarios generated by our model enhances this controllability.