BACKGROUND: In early 2001 in Australia there was a sudden and dramatic decrease in heroin availability that occurred throughout the country that was evidenced by marked increases in heroin price and decreases in its purity. AIM: This study examines the impact of this change in heroin supply on the following indicators of heroin use: fatal and non-fatal drug overdoses; treatment seeking for heroin dependence; injecting drug use; drug-specific offences; and general property offences. The study was conducted using data from three Australian States [New South Wales (NSW), Victoria (VIC) and South Australia (SA)]. METHODS: Data were obtained on fatal and non-fatal overdoses from hospital emergency departments (EDs), ambulance services and coronial systems; treatment entries for heroin dependence compiled by State health departments; numbers of needles and syringes distributed to drug users; and data on arrests for heroin-related incidents and property-related crime incidents compiled by State Police Services. Time-series analyses were conducted where possible to examine changes before and after the onset of the heroin shortage. These were supplemented with information drawn from studies involving interviews with injecting drug users. RESULTS: After the reduction in heroin supply, fatal and non-fatal heroin overdoses decreased by between 40% and 85%. Despite some evidence of increased cocaine, methamphetamine and benzodiazepine use and reports of increases in harms related to their use, there were no increases recorded in the number of either non-fatal overdoses or deaths related to these drugs. There was a sustained decline in injecting drug use in NSW and VIC, as indicated by a substantial drop in the number of needles and syringes distributed (to 1999 levels in Victoria). There was a short-lived increase in property crime in NSW followed by a sustained reduction in such offences. SA and VIC did not show any marked change in the categories of property crime examined in the study. CONCLUSIONS: Substantial reductions in heroin availability have not occurred often, but in this Australian case a reduction had an aggregate positive impact in that it was associated with: reduced fatal and non-fatal heroin overdoses; reduced the apparent extent of injecting drug use in VIC and NSW; and may have contributed to reduced crime in NSW. All these changes provide substantial benefits to the community and some to heroin users. Documented shifts to other forms of drug use did not appear sufficient to produce increases in deaths, non-fatal overdoses or treatment seeking related to those drugs.