Background: Nurses are essential to hospitals in rural areas, however little is known about the small rural hospital practice environment. Insight into this unique environment is important in attracting and retaining nurses in this setting. Aim: To examine nurses’ perceptions of the practice environment in Australian small rural hospitals. Design: A descriptive cross-sectional survey. Methods: Data were collected via an online survey of nurses working in Australian small rural hospitals. The Nursing Work Index-Revised: Australian was used to measure nurses’ perceptions of the practice environment and the relationships with demographics and hospital characteristics were examined. Descriptive, inferential statistics and multiple linear regression were applied to analyse the data. Findings: A total of 383 responses were included. The findings suggested an overall favourable practice environment. The collegial nurse-physician relations subscale was rated highest, which was supported by responses to free text comments. There were significant differences in nurses’ perceptions of the practice environment based on some demographic and hospital characteristics with those born overseas and those without 24-hour emergency departments having higher scores. The State/Territory where the hospital were located was a predictor of nurses’ perceptions of the practice environment. Conclusion: To positively influence the small rural hospital practice environment and improve staff satisfaction and retention, nurse leaders and managers can increase nurses’ involvement in organisational decision making and equip the workplace to better support rural nurses to work autonomously and with limited backup.