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Prescribed burning is a commonly applied management tool, and there has been considerable debate over the efficacy of its application. We review data relating to the effectiveness of prescribed burning in Australia. Specifically, we address two questions: (1) to what extent can fuel reduction burning reduce the risk of loss of human life and economic assets posed from wildfires? (2) To what extent can prescribed burning be used to reduce the risk of biodiversity loss? Data suggest that prescribed burning can achieve a reduction in the extent of wildfires; however, at such levels, the result is an overall increase in the total area of the landscape burnt. Simulation modelling indicates that fuel reduction has less influence than weather on the extent of unplanned fire. The need to incorporate ecological values into prescribed burning programmes is becoming increasingly important. Insufficient data are available to determine if existing programs have been successful. There are numerous factors that prevent the implementation of better prescribed burning practices; most relate to a lack of clearly defined, measurable objectives. An adaptive risk management framework combined with enhanced partnerships between scientists and fire-management agencies is necessary to ensure that ecological and fuel reduction objectives are achieved.