Temperate eucalypt woodlands were once widespread throughout southern Australia and Tasmania. Following European settlement, woodlands were cleared for agriculture, or grazed and converted to pasture. In the wheatbelts of south-western and south-eastern Australia, woodlands have been almost completely eliminated from the landscape with as little as 3% of some woodland types remaining. As a consequence, some temperate eucalypt woodland communities are amongst the most poorly conserved ecosystems in Australia. The main effect of widespread clearing and grazing has been the loss of habitat. This has had a devastating impact on the woodland flora and fauna. A number of species have become extinct and many are threatened; many others have undergone regional and local population declines. Woodlands now occur throughout much of their former range as remnants of varying size, quality and isolation. Many of these are under threat from further clearing, rising saline water tables and increased inundation, livestock grazing, nutrient enrichment, soil structural decline, altered fire regimes and the invasion of exotic weeds. The degradation and loss of biodiversity in temperate eucalypt woodlands will continue unless clearing stops and the management of remnants changes; this will invariably involve ecological restoration both at the patch and landscape level. The review discusses approaches to restoration and reveals that there are few data in the published literature describing techniques for reversing degrading processes and restoring diversity structure and function in remnant woodlands. This information is urgently needed. Past research on temperate eucalypt woodlands has focused on identifying the processes of degradation and these are now relatively well documented. There is a need to shift the focus of research to developing solutions for these problems.