Basketball is played both indoors and outdoors in Australia. Basketball remains one of the most popular participation sports in Australia, having a larger participation base than Cricket, Australian Rules Football, Rugby League and Rugby Union.

In Victoria, it is experiencing a large participation boom and is the largest participation sport in that state. It was briefly one of the most popular spectator sports in the early to mid 1990s, however its popularity has declined since then.

Australia has produced several professional basketballers for major overseas leagues.

The sport does retain a notable presence and international matches attract some media attention.

The first basketball match was played in Adelaide, South Australia in 1900. It took two decades for the first association to be established in Victoria, Australia in the 1920s. Basketball grew steadily throughout the 20th century.

The National Basketball League (NBL) is the top-level men's basketball competition, which began in 1979.

The Women's National Basketball League (WNBL) is the top women's basketball league, having begun in 1981.

The sport experienced rapid growth in the late 1980s as young people became more interested in American culture. Wearing basketball clothing became a fashion statement for many teenagers and basketball hoops proliferated in the backyards and basketball courts were, and still are, common at schools.

Capitalising on growing interest in the sport, the national competition became a huge hit in the major cities, providing a full entertainment package. Participation boomed and key people in the football codes, particularly Australian rules football began to express concern that it presents a drain on talent in the Australian Football League due to players looking for bigger money playing basketball in the United States. A few players including Luc Longley, Andrew Gaze, Shane Heal, Chris Anstey, Andrew Bogut and Lauren Jackson did actually make it big internationally, becoming poster figures for the sport in Australia.

Between the mid and late 1990s, however, the popularity went into sharp decline, particularly in the major cities.

The decline was such that the 1998-99 NBL Season season shifted to the current summer season format (October–April) in an attempt to avoid competing directly against Australia's various football codes which were rapidly rising in popularity.

As the barrier to entry to the national competition lowered, basketball found a niche in smaller towns and cities. Australians continue to support international basketball, particularly Olympic basketball and paralympic wheelchair basketball. During the Sydney 2000 Olympics a record crowd of 16000 watched Australia versus the United States of America in the men's wheelchair basketball in the SuperDome.

After 2001, the AFL began to reverse the trend and target basketball talent, luring several promising young players including Dean Brogan and Kurt Tippett. A number of well publicised injuries occurred with backyard basketball hoops also resulting in stricter council regulations in many cities.

In 2007, the sport went into crisis, with several of the major clubs defaulting and political finger pointing tore the sport apart before in 2009 threatening to send the sport into complete chaos. A new interest in basketball happened during the 2008 finals due to the closeness of the series. Melbourne and Sydney fought out 5 close games with Melbourne winning in the deciding game at the Sydney Entertainment Centre in front of a sell-out crowd of 10,244 . It was the first time it hosted a sell-out game since the 2003 grand final game against Perth. It was called one of the best series ever.