In reviewing the systematic arrangement of the genus, Troughton recognised three species names, including one highly variable population with six subspecies.

[5] The family's current name Thylacomyidae is derived from an invalid synonym Thylacomys, meaning 'pouched mouse', from the Ancient Greek thýlakos (θύλακος, 'pouch, sack') and mys (μῦς, 'mouse, muscle'),[3] sometimes misspelt Thalacomys.

[6][7] The term bilby is a loanword from the Yuwaalaraay Aboriginal language of northern New South Wales, meaning long-nosed rat.

Kirsch et al. (1997)[full citation needed] found them to be distinct from the species in Peroryctidae (which is now a subfamily in Peramelidae).

[13][14] They are nocturnal omnivores that do not need to drink water, as they obtain their moisture from food, which includes insects and their larvae, seeds, spiders, bulbs, fruit, fungi, and very small animals.

Unlike bandicoots, they are excellent burrowers and build extensive tunnel systems with their strong forelimbs and well-developed claws.

A bilby typically makes a number of burrows within its home range, up to about a dozen, and moves between them, using them for shelter both from predators and the heat of the day.

[23] There is a highly successful bilby breeding program at Kanyana Wildlife Rehabilitation Centre[24] near Perth, Western Australia.