Infection with the cat-borne parasite Toxoplasma gondii has been detected in numerous Australian marsupials and can lead to severe disease (toxoplasmosis) in some cases. The seroprevalence of Toxoplasma on Kangaroo Island, South Australia has been reported to be higher than the South Australian mainland in macropods, cats, and sheep, suggesting an increased risk of infection on this island. However, Toxoplasma seroprevalence in small- and medium-sized terrestrial mammals was almost zero on the island and did not differ from that on the mainland. We surveyed Toxoplasma seroprevalence in koala (Phascolarctos cinereus) populations on the island and on the mainland and assessed their risk of infection and their role in the life cycle of Toxoplasma. All screened koalas from the island (n = 94) and the mainland (n = 63) were seronegative. This represents the largest Toxoplasma seroprevalence survey in this species and provided sufficient evidence to confidently demonstrate freedom from parasite exposure in both island and mainland populations at the time of the survey. Because koalas are extensively arboreal and predominately consume tree foliage, they appear to be at negligible risk of Toxoplasma infection. Furthermore, as koalas are rarely consumed by cats, we suggest that they have a minor role in the parasite's life cycle.