The conservation of the Critically Endangered Leadbeater’s Possum Gymnobelideus leadbeateri in Victoria’s Mountain Ash Eucalyptus regnans forests is one of the most controversial native mammal conservation issues in Australia. Much of the controversy results from long-running conflicts between the demands of the native forest logging industry and associated impacts on Leadbeater’s Possum and its Mountain Ash forest habitat. Here we argue that despite a legislative obligation to protect Leadbeater’s Possum and some limited recent improvements in management, conservation efforts for the species have gone backwards over the past decade. The key problems we identify include that the Victorian Government has: (1) maintained levels of wood production that are too high given the amount of the forest estate that was burned in 2009, (2) failed to substitute clearfell logging practices with more ecologically-sensitive Variable Retention Harvesting Systems, (3) ignored the science (including by its own researchers) on the need for a large protected area for Leadbeater’s Possum, (4) altered key definitions such as those for mature trees and old growth that have substantially weakened the ability to protect Leadbeater’s Possum, and (5) overlooked the array of forest values beyond timber production (such as water and tourism) and which make a greater contribution to the economy. Our analyses suggest that populations of Leadbeater’s Possum are undergoing a substantial decline, as are other hollow-dependent species such as the Greater Glider Petauroides volans. In light of this, it is clear that Victoria needs to substantially change native forest timber harvesting practices as well as improve its efforts to conserve Leadbeater’s Possum and the Mountain Ash forests in which it occurs.