This paper reports on a 3-year observational study that measured the biological and financial impact of ovine Johne's disease (OJD) on 12 farms within the endemic area of Australia, undertaken to address a lack of understanding by producers of the on-farm impacts of the disease. Between 2002 and 2004, 12 OJD-infected flocks from four areas of southern NSW were studied. Each farm was described using property and flock information collected from questionnaires and climatic records. Flocks ranged between 3,500 and 20,000 sheep with some farms also grazing cattle. The importance of cropping varied between areas. Annual mortality rates were estimated from farm records provided by owners. The proportion of OJD mortalities for each year was estimated using information gained from a necropsy study conducted in 2002 where tissues were collected for histological examination from dead and moribund sheep during 5-day inspections in autumn, winter, spring and summer. The costs of deaths attributed to OJD were estimated by 2 methods. The first used a gross margin (GM) analysis over each one-year period. In the second a financial value of the sheep that were necropsied in 2002 was calculated. The average OJD mortality rate for the 12 farms was 6.2% (range 2.1% to 17.5%) in 2002 and 7.8% (range 1.8% to 14.6%) in 2003. Figures for 2004 are currently being compiled. The gross margin for an OJD-infected flock in 2002 was on average $10.90/ha less than if the flock had not been infected. OJD losses accounted on average for two thirds of the total estimated financial loss associated with sheep deaths. The study demonstrated a significant biological and financial impact of OJD on sheep flocks. Producers should be encouraged to undertake OJD control procedures to prevent mortality rates reaching the levels encountered in some flocks during this study.