We determined the extent to which Australian patients with incurable cancer are informed of their prognosis and treatment options by their oncologists and are encouraged to participate in treatment decisions. To this end, 118 patients with incurable cancer presenting for an initial consultation with one of nine oncologists in two Sydney teaching hospitals were enrolled in the study. Consultations were audio-taped. We developed a coding system to assess the disclosure of information considered necessary to equip patients to make informed decisions and to evaluate doctor encouragement of patient participation in treatment decision-making. Patient recall, satisfaction, and anxiety and their perceptions of the decision-making process were assessed. Most patients were informed about the aim of cancer treatment (84.7%), that their disease was incurable (74.6%) and about life expectancy (57.6%); 44.1% were presented with an alternative to cancer treatments, such as supportive care, 36.3% were informed how anticancer treatment would affect quality of life, and 29.7% were offered a management choice. Patient understanding was checked in only 10% of consultations. While greater information disclosure did not appear to elevate anxiety levels, greater patient participation in the decision making process was associated with increased anxiety levels ( P=0.0005), which persisted over a 2-week time span. Most patients were well informed, but important gaps remain, especially concerning information about prognosis and alternatives to cancer treatment.