This species is listed as Vulnerable B2ab(i,ii,iii,iv,v) because it has a limited area of occupancy (AOO), less than 2,000 km², and a few numbers of locations, and there is continuing decline projected in the number of mature individuals and AOO, extent of occurrence (EOO), and extent and/or quality of habitat. It could also approach VU under criterion A, but the extent of decline is poorly resolved and likely to be somewhat less than the threshold 30% over the previous and future 13-18 year periods (=3 generations). Although the rate of population decline is not well resolved, it is likely to be >10% in 3 generations (ca. 16 years), and the estimated number of mature individuals is 8,000 (with low reliability), so it could qualify also as VU C1.

This species is a small wallaby endemic to Australia, where it occurs only in the state of New South Wales (NSW). It has a patchy distribution in forests along the Great Dividing Range to an elevation of 1,000 m above sea level, extending from the vicinity of Newcastle in the south to a northern limit coinciding with the latitude of the town of Casino. As recently as 2006 the species was recorded further to the North, in the Border Ranges area just south of the NSW/Qld border, but it appears to have undergone a contraction at the northern limits of its range (DCCEEW 2022). Before extensive land clearing that followed European colonisation of Australia the species occurred further south, in the Illawarra region (Woinarski et al. 2014). It also occurred in coastal forests, where it is no longer found. There is an introduced population on Kauwau Island, New Zealand (Maynes 2008).

There is no robust estimate of the total population size. The species is uncommon and patchily distributed, and it is therefore considered unlikely that there are more than 10,000 individuals in total, but probably not fewer than 1,000 (Woinarski et al. 2014). This estimate was used by DCCEEW (2022) but noted to be of low reliability (Hayward et al. 2022).There has been an ongoing reduction in the distribution (and presumably abundance) of the species. However, the extensive wildfires of 2019-20 overlapped 59% of the known distribution was predicted to cause a precipitous decline, of 24% (Legge et al. 2022). However, subsequent intensive post-fire monitoring in parts of its range has indicated good survivorship through fire, few differences in occupancy (camera-trap rates) between unburnt and burnt areas, and no decrease from pre-fire to four years post-fire (McLean and Goldingay 2024, Goldingay 2024).

Preferred habitat is wet sclerophyll forest with a thick, shrubby understorey and nearby grassy patches (DCCEEW 2022). The species also occurs in dry sclerophyll forest with a dense understorey and occasionally in rainforest (Maynes 1977, Maynes 2008). The Parma wallaby shelters in the thick understorey through which it moves along runways (Woinarski et al. 2014). It is mainly nocturnal and emerges from the cover of shrubs around dusk to feed on grasses and herbs at the edge of clearings (Maynes 2008).

The parma wallaby feeds on grasses, herbs and to a lesser extent, fungi (Maynes 2008; Vernes 2010). It is nocturnal and cathemeral (active in early evening and late morning) and mostly solitary.

Inappropriate fire regimes. The species is susceptible to the effects of forest fire because apart from killing some animals directly fire removes much of the dense understory vegetation that it requires for shelter. Fires that are too intense and which recur too frequently do not allow the re-development of habitat for the species. There has been a general increase in the occurrence of high-intensity fire in the species' range, initially because of loss of traditional fire management following European colonisation, and more recently due to increased occurrence of severe fire weather because of climate change. The 2019-2020 wildfires overlapped an estimated 59% of the range of the Parma Wallaby, with predicted decline estimated at 24% one year later, and 16% after three generations (Legge et al. 2022). Subsequent post-fire monitoring indicated that the species was less affected by fire than those predictions (McLean and Goldingay 2024, Goldingay 2024). Further destructive climate-driven fire events are likely in the future. Fire may also compound impacts of predation by cats and foxes, as there is less shelter in recently burnt areas.

Predation by invasive species. The European Red Fox preys on the Parma Wallaby (Stobo-Wilson et al. 2021), and has caused the failure of past attempts to translocate the species. In the dense forest vegetation favoured by the species, it is probably able to evade predation by foxes, but is at risk along edges of grassy habitat and roadways. Fire probably increases the exposure of parma wallabies to predation by removing the cover of dense understorey vegetation. Foxes increase their hunting in open areas following fire (Hradsky 2020). The Parma Wallaby may be vulnerable to predation by feral cats and wild dogs or dingoes under some conditions, but the threat posed by the red fox is more significant.

Land clearing and habitat loss. The range of the Parma Wallaby has been reduced since European colonisation by land clearing for agriculture, urban development and timber harvesting. Some land clearing continues, though at reduced levels. 43% of the known range occurs in conservation reserves, and hence protected from clearing (DCCEEW2022).

Timber harvesting. Just over half the range of the species is in State Forests or private forests used for timber production. Forestry activities that involve thinning or vegetation removal are likely to reduce the quality of habitat for the species.
Climate change. Across the range of this species, climate change is expected to cause increases in temperature, incidence and severity of drought and of wildfire, with 'major' consequences (DCCEEW 2022).

Just under half (43%) of the species' distribution occurs in protected areas. The primary conservation needs for the species are to improve knowledge of its population by survey and monitoring of distribution and abundance, prevent further loss of habitat, improve fire management programs to reduce the impact of destructive fires, and control the impacts of the European red fox. Six sites have been recognised as priority management area for this species through the NSW Saving Our Species program. A 400-hectare predator-proof exclosure protects the species at Aussie Ark (Barrington Wildlife Sanctuary), and it will also be protected in within a predator-excluded area at Ngambaa Safe Haven.
The Parma wallaby is listed as Vulnerable under Australian legislation [since 2022] (DCCEEW 2022) and in New South Wales.