Objective: To document the development of the low tar harm reduction programme in Australia, including tobacco industry responses. Data sources: Tobacco industry documents, retail tobacco journals, newspapers, medical journals, and Anti-Cancer Council of Victoria (ACCV) newsletters and archival records. Study selection: Documents on the strategies and knowledge bases of the ACCV, other Australian health authorities, and the tobacco industry. Results: The ACCV built a durable system for measuring and publicising the tar and nicotine yields of Australian cigarettes and influencing their development. The tobacco industry initially sought to block the development of this system but later appeared to cooperate with it, as is evidenced by the current market dominance of low tar brands. However, behind the scenes, the industry used its substantial knowledge advantage regarding compensatory smoking and its ability to re-engineer cigarettes to gain effective control of the system and subvert the ACCVs objectives. Conclusions: Replacement of the low tar programme with new means of minimising the harms from cigarette smoking should be a policy priority for the Australian government. This will require regulation, rather than further voluntary agreements, and stringent monitoring of successor programmes will be necessary.