Varicella zoster virus (VZV) causes both chickenpox and herpes zoster and is responsible for a significant disease burden, including hospitalizations and deaths, in Australian children and adults. Varicella vaccine has been available in Australia for 5 years; however, from November 2005, it will be funded for use in all susceptible children at 18 months and 10-13 years of age under the National Immunisation Program. Experience with universal varicella vaccination of children in the USA over the last 10 years has shown that the vaccine is safe and highly effective in reducing varicella-related disease. This review summarizes the epidemiology of VZV-related disease in Australia, the use of varicella vaccine and the international experience with vaccine efficacy and safety. The potential impact of varicella vaccination on the incidence of herpes zoster is also discussed.