A neurological disorder in Merino sheep, characterised clinically by progressive posterior ataxia and microscopically by Wallerian degeneration in thoracic segments of the spinal cord, is described. Animals of both sexes were affected, with the earliest onset of disease being at 5 months of age. Most affected animals died before 2 years of age. The clinical, pathological and epidemiological features suggest that this degenerative thoracic myelopathy is a previously unrecognised entity differing from other reported causes of ataxia in sheep in Australia.