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The genus Palorchestes is known from fossils from various parts of Australia. The most recent species in the genus probably became extinct between 20,000 and 40,000 years ago.

The prominent British comparative anatomist, Richard Owen, named the genus in 1873. His description was based on an anterior (front) portion of a skull from Gippsland in Victoria. Because Palorchestes has molar teeth which have features similar to kangaroo molars, Owen stated that it was 'the largest form of kangaroo hitherto found'.

Owen's identification was not challenged until 1958, when Jack Woods of the Queensland Museum revised the genus and suggested, because of certain un-kangaroo-like features, that it would be more appropriate to place this odd marsupial within the family Diprotodontidae (the marsupial family based on Diprotodon).

In the meantime the Australian Museum had gone ahead and constructed a full scale model of Palorchestes as a giant kangaroo about three metres tall. Shortly after its construction, Woods published his paper declaring that it was not a kangaroo. To lessen any possible embarrassment, the model of the Palorchestes kangaroo was taken to the backyard of the Museum and smashed to pieces so it was unrecognisable and then discarded. Today only photographs remain.

The Museum's fossil collections contain a good number of Palorchestes specimens, including a recently acquired near-complete cranium. Palorchestes has since been reconstructed as a diprotodontid (see illustration). It has been given a short trunk like a tapir as a result of the discovery of certain features on the skull that are known from those animals that have small trunks.