The changing fortunes of the Australian sheepmeat and wool sectors have led to dramatic changes to the national flock. In recent years the profitability of the sheepmeat sector has provided mixed signals to producers to simultaneously sell to capitalise on high prices, particularly for mutton and breeding stock, while also shifting enterprises towards dual purpose (meat and wool) and specialist lamb production systems. This essay provides a summary of changes to the Australian sheep flock in the past twenty years, including the growth of the sheepmeat sector and the decline of the wool sector. It considers drivers of profitability in the sheep industry, comparing the recent economic performance of prime lamb, dual purpose, and wool flocks. It is suggested that there are a number of common factors evident in the most profitable sheep businesses. A discussion about risk management and volatility helps explain the rise of dual production systems, the persistence of risk-averse wool enterprises, and highly productive but volatile returns for specialist prime lamb producers. Flock structure is identified a major determinant of profitability, with breeding ewes critical to production. The challenges posed will also shape the future of the Australian sheep flock. Fertility and drought-induced sell-off are noted as major factors affecting changes to the Australian flock, which could be exacerbated by an increasingly variable and extreme climate. Finally, this essay considers the future size and composition of the Australian sheep flock. A flock structure model is used to estimate the effects of hypothetical changes to marking and slaughter rates. It is concluded that it remains possible to sustain production and kill the 'Golden Sheep', provided there is a focus on productivity and reproduction efficiency to ‘optimise’ the remaining flock.