Macrorhabdus ornithogaster is a yeast that grows at the isthmus between the proventriculus and ventriculus in birds. It commonly infects budgerigars (Melopsittacus undulatus) in Australia. Infected budgerigars may show no signs while others die with melaena, malabsorption and emaciation despite what appears to be a ravenous appetite. The risk factors are not fully understood. In Australian cage birds, Macrorhabdus ornithogaster was first identified in the early 1990s. It is now likely endemic in the exhibition budgerigar community, and in populations of wild birds across most Australian states. Despite its significance as a pathogen, there is a lack of research surrounding the optimisation of the diagnostic tools both in the veterinary clinic and laboratory. The standardisation of diagnostic tools, utilising only the most sensitive testing modalities, will improve diagnosis and early detection as well as improving treatment outcomes avian patients. The treatment of choice is amphotericin B and it has been recommended in the literature at a range of dose rates and frequencies. Field experience indicates that its efficacy is inconsistent with some birds lacking a response to therapy. Our work established the two most sensitive diagnostic tools, the faecal suspension technique and direct isthmus cytology, for the detection of Macrorhabdus ornithogaster in budgerigars ante- and post-mortem, respectively. We established that amphotericin B, when using the current treatment recommendations, fails to clear Macrorhabdus ornithogaster from most birds treated, and that no link could be established between several common immunosuppressive viruses of budgerigars, and infection with Macrorhabdus ornithogaster. We outline future directions for research and prioritise areas requiring deeper understanding. In doing so, we suggest novel drug delivery technologies and future directions for the investigation and treatment of Macrorhabdus ornithogaster.