Tree-kangaroos are a unique group of arboreal marsupials that evolved from terrestrial ancestors. The recent discovery of well-preserved specimens of extinct tree-kangaroo species (genus Bohra) within Pleistocene cave deposits of south-central Australia provides a unique opportunity to examine adaptive evolution of tree-kangaroos. Here, we provide the first detailed description of the functional anatomy of the forelimb, a central component of the locomotor complex, in the extant Dendrolagus lumholtzi, and compare its structure and function with representatives of other extant marsupial families. Several features were interpreted as adaptations for coping with a discontinuous, uneven and three-dimensional arboreal substrate through enhanced muscular strength and dexterity for propulsion, grasping, and gripping with the forelimbs. The forelimb musculoskeletal anatomy of Dendrolagus differed from terrestrial kangaroos in the following principal ways: a stronger emphasis on the development of muscles groups responsible for adduction, grasping, and gripping; the enlargement of muscles that retract the humerus; and modified shape of the scapula and bony articulations of the forelimb bones to allow improved mobility. Many of these attributes are convergent with other arboreal marsupials. Tree-kangaroos, however, still retain the characteristic bauplan of their terrestrial ancestors, particularly with regard to skeletal morphology, and the muscular anatomy of the forelimb highlights a basic conservatism within the group. In many instances, the skeletal remains of Bohra have similar features to Dendrolagus that suggest adaptations to an arboreal habit. Despite the irony of their retrieval from deposits of the Nullarbor “Treeless” Plain, forelimb morphology clearly shows that the species of Bohra were well adapted to an arboreal habitat. J. Morphol. 2011. © 2011 Wiley-Liss, Inc.