[2] The reserve is an important refuge for native flora and fauna in a highly fragmented landscape, one in which the majority of the original vegetation has been removed.

[2] After European settlement but prior to its listing as a Nature Reserve the site was used as camp on the traveling stock route and as a public watering place.

[10] The reserve has a high level of biodiversity for its size and is an important remnant for a range of flora and fauna, including some nomadic and migratory birds species.

The second largest group of vegetation is a eucalyptus-callitris mix; including inland grey box, mugga ironbark, and black cypress pine.

The eucalyptus and callitris community has a well-developed understory that includes native shrubs such as cough bush, quandong and hakea wattle.

[2][14] Some of the reserve's breeding residents such as brown treecreeper and varied sittella are listed as Vulnerable under the NSW Threatened Species Conservation (TSC) Act 1995.

[2][14] Some invertebrates found in the reserve are common freshwater yabby and at least nine species of butterfly including spotted Jezebel and Australian painted lady.

[2][14] Due to its small size and isolation in a fragmented landscape The Charcoal Tank Nature Reserve's structure and biodiversity are at risk from threatening processes such as climate change, edge effects, pest species, pollution, high intensity fire and further clearing of roadside and patch remnants in the region.

[7] Small remnants such as The Charcoal Tank Nature Reserve and roadside strips are under increased pressure from edge effects as they have smaller interior habitats.

[3] Gully erosion in the west of the reserve is a long-standing problem, caused by runoff from the cleared surrounding paddocks and the artificial drainage line to dams.

Rubbish may attract introduced pest species to the reserve, and general public access can increase the likelihood of fire with makeshift fireplaces evident.

[14] A recent study using data on white-plumed honeyeater collected in The Charcoal Tank Nature Reserve over the past 23 years shows their size has increased in correlation with warmer mean temperatures and a decrease in rainfall.

Callitris rely on seeds alone for reproduction and post fire may be outcompeted by species such as Eucalyptus that are faster growing and have more recovery options through epicormic buds and lignotubers.

[2] Some immediate management challenges include maintaining the fence line to prevent the entry of domestic livestock, erosion control and minimising pollution and disturbance from the adjoining rest stop.

[11] Currently the strategy requires that fire in the reserve be immediately suppressed, any prescribed burns may only occur after a formal review of environmental factors because of the critically endangered Mallee-Broombush community.