Koalas are characterised by a highly unusual vocal anatomy, with a descended larynx and velar vocal folds, allowing them to produce calls at disproportionately low frequencies. Here we use advanced imaging techniques, histological data, classical macroscopic dissection and behavioural observations to provide the first detailed description and interpretation of male and female koala vocal anatomy. We show that both males and females have an elongated pharynx and soft palate, resulting in a permanently descended larynx. In addition, the hyoid apparatus has a human-like configuration in which paired dorsal, resilient ligaments suspend the hyoid apparatus from the skull, while the ventral parts tightly connect to the descended larynx. We also show that koalas can retract the larynx down into the thoracic inlet, facilitated by a dramatic evolutionary transformation of the ventral neck muscles. First, the usual retractors of the larynx and the hyoid have their origins deep in the thorax. Secondly, three hyoid muscles have lost their connection to the hyoid skeleton. Thirdly, the genioglossus and geniohyoid muscles are greatly increased in length. Finally, the digastric, omohyoid and sternohyoid muscles, connected by a common tendinous intersection, form a guiding channel for the dynamic down-and-up movements of the ventral hyoid parts and the larynx. We suggest that these features evolved to accommodate the low resting position of the larynx and assist in its retraction during call production. We also confirm that the edges of the intra-pharyngeal ostium have specialised to form the novel, extra-laryngeal velar vocal folds, which are much larger than the true intra-laryngeal vocal folds in both sexes, but more developed and specialised for low frequency sound production in males than in females. Our findings illustrate that strong selection pressures on acoustic signalling not only lead to the specialisation of existing vocal organs but can also result in the evolution of novel vocal structures in both sexes.