Climate during the Australian Eocene epochs was fairly humid and closed-canopy rainforests were widespread. Later there was an increase of cooler, temperate plant species, indicating either occasional spells of coolness or seasonal cool periods. These conditions may have provided suitable habitats for tree-dwelling marsupials such as the phalangeroid species, and they may have prompted the development of small forest-dwelling diprotodont marsupials that hopped through the dense vegetation on the ground.   By Oligocene times the marsupials had begun to divide into the major familiar groups - possums, primitive kangaroos, wombats and diprotodontids.

Australia’s earliest Tertiary mammal fossils were found at two places in Tasmania.   Some teeth from deposits at Geilston Bay near Hobart indicate the presence of phalanger-like possums, early diprotodontids and a relative of the modern pigmy possum of late Oligocene times.

Today Geilston Bay is a dry sclerophyll (bushland) environment, but the presence of a phalanger indicates that it was a warmer, wetter rainforest climate during the Oligocene.

In north-central Tasmania a fragmentary skeleton of’ a possum-like animal was recovered from Fossil Bluff near Wynyard.   The fossils are only slightly younger than Geilston Bay.   Wynyardia bassiana is probably 21 million years old.   The skull is nearly complete but the teeth are missing.   It appears to have died on a beach and was buried in sediment by gentle wave action.   All of’ the other fossils from the Bluff were marine species.

The now dry or seasonal lakes of central Australia once contained a great variety of animals, some of which are the ancestors of living forms.  There were lakes, swamps and rivers of enormous size in the Northern Territory, Western Australia and South Australia.

Fossils from the Etadunna and Namba formations of the Lake Eyre basin, South Australia date back to the mid-Miocene, approximately 15 million years ago.    From the Etadunna and Ngapakaldi formations have come an early koala, primitive marsupial ‘mice’, an early ‘toothed’ platypus, a wombat, primitive marsupial ‘tapirs’, several kinds of’ ‘possum’, and potoroos.

 
At the end of the Miocene there was probably a gradual drying out of the centre of Australia, a trend that is continuing today.    It is possible that some small portions of Australia were dry throughout much of the Tertiary.    Indirect evidence of this is the existence of the marsupial mole, an animal adapted to arid regions, and also in some of the specialised marsupial ‘mice’ of the desert.

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The Pliocene gives evidence of a drying and cooling climate.   The great lakes and rivers of’ central Australia began to retract. Much of the rainforest was replaced by grassland.   With the retreat of forests, many of the giant browsing marsupials became extinct or rare, while grazing kangaroos flourished in their new habitat.   

Only tiny patches of relict Mio-Pliocene habitat survive today in isolated places of central Australia.   Although the larger animals associated with these habitats became extinct, some of the small mammals that are still found there may have changed very little since the late Miocene and early Pliocene.   Many of the modern genera of marsupials had made their appearance.

The Pleistocene is characterised by periodic evens of extremely cold weather. Around 25,000 years ago, Australia was at least 8 c colder than it is today, with snow and glaciers on the mountains of Tasmania and Victoria.

Evidence from excavations indicate that there were severe droughts over the last 25,000 years, but the rhinoceros-size marsupial Diprotodon and several specialised kangaroos appear to have been well adapted to the semi-arid conditions of the interior.   The coastal margins remained relatively moist.   Cool to cold climates prevailed in the southern half of the continent.   Eastern Tasmania was cold and very dry at the time of maximum glaciation 18 to 26 thousand years ago.

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Periodic drying out of major water sources is indicated by the bones of drought stricken animals that died around the lake margins.   Although some appear to have remained well watered, most of the large Pleistocene marsupials became extinct some time before 15,000 years ago.   Many of the extinctions appear to have taken place much earlier, around 35,000 years ago, but this has by no means been settled by scientists working on the problem.     Because Aboriginal people appeared in Australia at about the same time as the extinctions occurred, some scientists favour the idea that hunting and burning may have been the cause.   We many never have enough evidence to say whether the Aborigines, climate or other causes were responsible.