There were 1,681 cases of invasive pneumococcal disease (IPD) notified to the National Notifiable Diseases Surveillance System in Australia in 2001; a rate of 8.6 cases per 100,000 population. The notification rate varied between states and territories and by geographical region with the highest rates in the north of the country. Pneumococcal disease was reported most frequently in children aged less than 5 years (47.3 cases per 100,000 population). Enhanced surveillance for IPD was carried out in the Northern Territory, Western Australia, South Australia, Victoria, Tasmania and metropolitan areas of New South Wales, encompassing 72 per cent of the population and providing additional data on 86 per cent of all notified cases. Enhanced surveillance data revealed high rates of pneumococcal disease in Indigenous Australians. Rates of IPD in Indigenous children aged less than 5 years were as high as 483 cases per 100,000 population in the Northern Territory. The clinical presentation of IPD was most commonly pneumonia (56%) and bacteraemia (36%). There were 125 deaths attributed to IPD resulting in an overall case fatality rate of 8.6 per cent. More than half (54%) of all cases had a recognised risk factor for IPD. Eighty-six per cent of serotypes identified in non-indigenous children compared with only 55% of serotypes in Indigenous children were in the 7-valent vaccine. Antibiotic susceptibility testing showed reduced susceptibility to penicillin in 12 per cent, and to third generation cephalosporins in 5 per cent of isolates. These are the first national data available on IPD in Australia and will assist in evaluating the impact of the newly introduced conjugate vaccine and guide overall pneumococcal vaccine strategies.