Past and current research on restoring degraded rangelands was reviewed at a workshop held in July 1989 by the CSIRO Division of Wildlife and Ecology. Basic ecological and economic principles for restoration, and prevention of further degradation, were explored and priorities for future research were identified. Although all ecological principles are applicable to restoring degraded rangelands to some degree, four principles emerged as being critically important: (1) ecesis, those basic processes involved in the successful establishment of desired forage species; (2) ecological succession, that series of species replacements where fast growing ephemeral species are replaced by slower growing perennial species which are strongly competitive; (3) resource patchiness, where resources, such as nutrients and water, are concentrated within patches or islands; and (4) facilitation, where herbivores (e.g. kangaroos) act as agents for seed dispersal, influence the establishment of seedlings, and shift species composition by causing differential mortality in species populations. A number of economic principles also apply to the restoration of rangelands. However, one very significant principle emerged from the Workshop: sustainability, which implies that economic benefits must be long-term, cumulative and lasting (i.e. the costs and benefits of restoration treatments must be viewed well into the future). Participants in the Workshop listed the following research areas as high priority: (1) assess the extent and current rate of degradation in different rangeland regions, (2) define indicators of degradation for different rangeland types, (3) form multi-disciplinary teams to study those processes critical to understanding degradation and restoration (include scientists from different organizations such as CSIRO and State agencies), and (4) transfer information to land managers to raise their awareness of the degradation problem and the need for restoration using appropriate tools such as computer-based decision support systems (including economic models).