The koala population in southwest Queensland is a large low-density population of important conservation value which is vulnerable to habitat loss, drought and climate change. The nutrient quality of Eucalyptus food trees favoured by koalas is an important factor influencing the survival of the koala on a low-nutrient-and-high-toxin diet. This study investigated the relationship between the diet of koalas, and food tree characteristics. Vegetation surveys, cuticle analysis and leaf chemical analysis were conducted in 14 study sites in southwest Queensland during the winter of 2010. Koala diet composition was different to eucalypt tree species availability, with Eucalyptus camaldulensis (56.5%) the most important tree species, E. coolabah (15.4%) and E. populnea (12.4%) of secondary preference. Leaf chemicals (moisture, total nitrogen, total phenolics, and a nutrition index = (moisture*nitrogen) / total phenolics) were significantly related to tree species, surface water availability, soil type and proximity to major creeks. Only leaf moisture was significantly correlated with koala food tree species preference. The presence of surface water appears to be a crucial characteristic of suitable koala habitat while riparian habitats dominant by E. camaldulensis are critical for conserving the koala populations in southwest Queensland.