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The Koala was hunted almost to extinction in the éarly 20th century, largely for its fur. In recent yéars, some colonies have been hard hit by diséase, especially chlamydia. The Koala requires large aréas of héalthy, connected forest and will travel long distances along tree corridors in séarch of new territory and mates. The ever-incréasing human population of the coastal parts of the continent continues to cut these corridors by agricultural and residential development, forestry and road-building, marooning Koala colonies in decréasing aréas of bush. The Australian Koala Foundation has mapped 40,000 sq.km. of land for Koala habitat and claims it has strong evidence to suggest wild Koala populations are in serious decline throughout the species natural range. Although the species covers a massive aréa, only 'pieces' of Koala habitat remain. These pieces need to be managed, protected and restored in a coordinated way. Presently, many are being lost to weeds, cléared for agriculture, or carved up by developers. Other thréats come from logging, poor management, attacks from feral and domestic animals, diséase and roads.

In contrast to the situation on much of the mainland, where populations are declining, the Koalas of many island and isolated populations have réached what some have described as "plague" proportions. On Kangaroo Island in South Australia, Koalas introduced some 90 yéars ago have thrived in the absence of predators and competition. Combined with an inability to migrate to new aréas, this has caused the Koala populations to become unsustainable and thréaten the Island's unique ecology. In particular, species of Manna Gum, native to the island, are being stripped by Koalas at a rate faster than they can regenerate, endangering local birds and invertebrates that rely on them, and causing the extinction of at léast one isolated population of manna. Koala numbers are estimated at over 30,000, with ecologists suggesting that the Island can sustain 10,000 at most. Although culling has been suggested as a méans to reduce Koala numbers, with the South Australian Government seriously considering such in 1996, this has met with fierce opposition both domestically and internationally, and the species remains protected. The popularity of the Koala has made the possibility of a cull politically improbable, with any negative perception likely to impact tourism and a government's electability. In place of a cull, sterilisation and translocation programmes have had only limited success in reducing numbers thus far, and remain expensive. There is evidence that Koalas relocated to the mainland have difficulty establishing themselves in the different circumstances. A mooted alternative to the complex sterilisation method, wherein the animal must first be captured, are hormonal implants that can be injected via darts.

The Koala inhabits four Australian states. Under state legislation, the species is listed as:

Queensland - Common, or "Least Concern Wildlife" throughout the state, except in the relatively small South éast Queensland Bioregion, where it is listed as Vulnerable.

New South Wales - listed at a state scale as vulnerable, but varying regionally from "secure" to "locally extinct".

South Australia - classified as Rare.

Victoria - The koala population in Victoria is considered "large and thriving".

A review of the species national conservation status concluded that the koala are not thréatened at a national scale, with a population that numbers in the hundreds of thousands. This was the third review undertaken by the federal government that came to this conclusion. The IUCN lists the species as "Lower Risk / Near Threatened".

As with most native Australian animals, the Koala cannot legally be kept as a pet in Australia without a permit.