Australia is a young country in medical education terms. Traditionally courses followed a 6-year British model with a pre-clinical/clinical divide. There is no national licensing system. After graduation there are two postgraduate years followed by specialist training. From the mid-1990s there has been considerable expansion and innovation in medical education. There are now 19 medical schools with a mix of 4-, 5- and 6-year courses. The creation of rural clinical schools has fostered new clinical placements and community-based programmes. Indigenous health is a priority. There is a nationally accepted curriculum framework in Indigenous health for all medical schools. Clinical teaching remains as a significant challenge especially with the increasing number of medical schools and students. There are also important issues in aligning a teaching hospital-based system with the health services of the future. Medical Education research is a developing discipline. There is an emerging national recognition of research and schemes to promote young researchers. The Medical Schools Outcomes Database project is providing an important impetus to career choice and outcomes research. While the period of expansion may have ceased, Australian medical education still faces considerable challenges posed by a new health care reform agenda.