In the summer of 1979–80, there was a sharp decline in the koala population along Mungalalla Creek in south-western Queensland. The decline was associated with a heatwave and drought. Live animals and carcasses were counted soon after the decline and at three subsequent periods. It was estimated that more than 63% of the population died. The drought and heatwave caused extensive leaf-fall and/or browning of the foliage in food trees along stretches of dry creek. The proximate cause of death was thought to be a combination of malnutrition and dehydration. There was evidence, including the differential survival of koalas along the creek, of marked heterogeneity in the quality of the habitat. At sites where the trees were not affected (mainly on large permanent water-holes) koalas had good body condition and mortality was low, whereas on stretches of dry creek (marginal habitat), koalas were in poor health (poor condition, anaemia, high tick loads) and mortality was very high. Survival of the population was not threatened because many animals survived at the permanent water-holes. There is evidence that mortality was highest among young animals which may be excluded from optimal sites by older dominant animals. In the years after the crash, continuing drought appeared to prevent recovery of the population. It is thought that such population crashes are rare events as they are apparently caused partly by unusual climatic conditions.