The diversity of biologies amongst Australian thrips of the family Aeolothripidae is discussed. In the basal clades of this family species are phytophagous, also sometimes monophagous and univoltine (Cranothrips Bagnall and Cycadothrips Mound). In the most advanced clades, species are obligate predators, often on other thrips species (Franklinothrips Back and Mymarothrips Bagnall), but in the intermediate clades many species are both phytophagous and facultative predators (Aeolothrips Haliday and Desmothrips Hood). Keys are provided to identify the 36 species and 12 genera known from Australia. Of these, 32 species and 5 genera are endemic, and the southern continent relationships of this fauna are discussed. Seven species are newly described: Franklinothrips basseti, with unusual dark forewings, from Queensland; Cranothrips bellisi, the smallest member of this family and with the ovipositor greatly reduced, from the Northern Territory near Darwin; Cycadothrips emmaliami, from Macrozamia reidlei male cones in Western Australia; Desmothrips chirus, a grass-living species with remarkable Chirothrips-like females, from Darwin; D. darwini, a second bicoloured grass-living member of this genus, from Darwin; D. marilynae, in which males have a unique abdominal chaetotaxy, from Western Australia; D. stepheni, with unusually long cephalic setae, from near the Gulf of Carpentaria. Variation in the bicoloured, grass-living species Gelothrips cinctus Hood is discussed, and a Mymarothrips species from Darwin is re-identified as the Indonesian species M. bicolor Strassen.