In early 2001, Australia experienced an abrupt and substantial reduction in the availability of heroin. This study was commissioned by the National Drug Law Enforcement Research Fund to provide a detailed description of the course of the heroin shortage,a comprehensive analysis of its effects and an examination of the factors contributing to its occurrence. The study is based on a number of data sources, including interviews with regular heroin users and key informants and indicator data such as arrests and overdose deaths, and includes a focused examination of drug markets in three jurisdictions: New South Wales, Victoria and South Australia. The study finds that the heroin shortage was probably due to a combination of market and law enforcement factors, and that the market now appears to have stabilised, though it has not returned to its pre 2001 levels. The consequences of the heroin shortage included changes in patterns of drug use, including a switch to other drugs; a decrease in acquisitive crime; a decrease in fatal and non fatal overdoses; mixed health effects for different groups of heroin users; changed demands on health and drug treatment services; and an increase in incidents involving violent and aggressive individuals, following greater use of cocaine and methamphetamine. The study also considers the policy implications of the reduction in heroin supply in Australia. The most important implication of the heroin shortage is that it is possible, under some circumstances, for law enforcement to accomplish a substantial reduction in the availability of imported drugs like heroin. However it is uncertain to what degree the reduction achieved in heroin supply in 2000 could be easily reproduced by an act of policy.