Formerly, Leadbeater's possums were moderately common within the very small areas they inhabited; their requirement for year-round food supplies and tree-holes to take refuge in during the day restricts them to mixed-age wet sclerophyll forest with a dense mid-story of Acacia.

[10][11] From that time on, the fear that it might be extinct gradually grew into near-certainty after the swamps and wetlands in Australia around Bass River in south-west Gippsland were drained for farming in the early 1900s.

[4] The combination of 40-year-old regrowth (for food) and large dead trees left still standing after the fires (for shelter and nesting) allowed the Leadbeater's possum population to expand to an estimated peak of about 7500 in the early 1980s.

[18] All members sleep together in a nest made out of shredded bark in a tree hollow, anywhere from 6 to 30 metres above ground level and roughly in the centre of a territory of 3 hectares, which they defend actively.

[19] Solitary Leadbeater's possums have difficulty surviving: when young males disperse at about 15 months of age, they tend either to join another colony as a supernumerary member, or to gather together into bachelor groups while they wait to find a mate.

Their diet is omnivorous: feeding on a range of wattle saps and exudates, lerps, and a high proportion of arthropods which they find under the loose bark of eucalypts, including spiders, crickets, termites and beetles.

[citation needed] Leadbeater's possums and their forest habitat have been the subject of the largest longitudinal study of any species in the world—conducted by David Lindenmayer, a professor at the Australian National University, and his research assistants since 1983.

Hundreds of peer reviewed scientific papers, journal articles and books have resulted from the years of data collection by the ANU team.

With 43% of its known Central Highlands habitat[20] destroyed in the bushfires of February 2009 – large areas of forest around Toolangi, Marysville, Narbethong, Cambarville and Healesville – the species' status is currently in doubt.

The then minister for the environment, Tony Burke, agreed with the nomination and forwarded the application to the scientific committee of the EPBC Act requesting urgent consideration.

[26] Despite a joint federal and state government plan to save it, since the 1980s, the Leadbeater's possum population halved to around 2000[citation needed] even before the Black Saturday fires.

[12] David Lindenmayer (Australian National University) has argued that the need for nest boxes indicates that logging practices are not ecologically sustainable for conserving hollow-dependent species like the Leadbeater's possum.

The case was lost by MyEnvironment due to inconsistencies in the wording of the Leadbeater's Possum Action Statement (10 years out of date) and the forestry prescriptions adhered to by VicForests.

[34] On 27 June 2013 the Napthine led State government passed legislative changes to allow VicForests access to Victoria's forests for the next 25 years and to be self monitoring (this follows the success of other recent cases preventing logging of remaining possum habitat).

[36][37] On 22 April 2015, Greg Hunt, the Minister for the Environment, announced that the Leadbeater's possum would be listed as a "critically endangered" species under the EPBC Act.

On the eve of an ABC 4 Corner episode on "Extinction" (24 June 2019) the then Environment Minister, Sussan Ley announced that it would be re-listed as "critically endangered".

[43][failed verification] There are no plans to release the remaining two animals despite a further two colonies of Leadbeater's possums having recently been located at Lake Mountain in remnant gully vegetation.

Healesville Sanctuary's captive breeding program for Leadbeater's possums recommenced in May 2012 and now comprises 6 individuals from the genetically distinct Yellingbo population.

[citation needed] On 14 September 2017, National Geographic reported that the Leadbeater's possum was the 7,000th animal photographed for The Photo Ark by Joel Sartore.