Sand flathead (Platycephalus bassensis) was once both a significant commercial fishery and the largest recreational fishery in Port Phillip Bay. Between 2000 and 2010 sand flathead stocks declined by 87% in Port Phillip Bay. The cause/s of this decline are unknown; and attempts to rebuild stocks are unlikely to be successful without identifying and addressing the cause/s as part of any management response. This project drew on a range of data sources to summarize what is known about the current status of the fishery in Port Phillip Bay, the probable causes of the decline, and the prospects for recovery. There was little evidence that fishing pressure contributed to the decline of sand flathead stocks, or that the population was overfished during this period. Fisheries exploitation rates remained relatively stable between 2000/01 and 2006/07, despite a significant decline in the overall stock biomass due to a three-fold reduction in the total catch over this period. By comparison, there is substantial evidence that the decline was linked to environmental changes. Environmental impacts were investigated by examining changes in sand flathead recruitment and the environmental drivers of recruitment, growth and diet. Sand flathead recruitment in Port Phillip Bay was characterised by very high recruitment pulses in the late 1980s/early 1990s, but little recruitment from 1997 onwards coinciding with a period of prolonged drought in southern Australia from 1997–2009. The prospects for recovery in the short-to-medium term for this fishery appear positive, but less optimistic over the longer-term due to expected climatic changes.