Bandicoots and bilbies (Peramelemorphia) represent a distinct lineage within the marsupial adaptive radiation, which despite several curious anatomical traits has received little morphological attention. Many bandicoot species (family Peramelidae) dig for subterranean food, while bilbies (family Thylacomyidae) employ their forelimbs to dig extensive burrow systems for shelter. In the current study, dissections of the southern brown bandicoot (Isoodon obesulus) (n = 7) and greater bilby (Macrotis lagotis) (n = 4) provide the first anatomical descriptions of forelimb musculature in these species. The anatomical arrangement of forelimb muscles in I. obesulus and M. lagotis differs from that of other marsupials and corresponds to the aclaviculate pectoral girdle and modified arrangement of digits in the study species. Comparative and functional interpretations indicate that the forelimb of I. obesulus is well equipped for scratch digging and demonstrates muscular modifications in order to generate large out-forces. The bones of the forelimb, and in particular the antebrachium, are relatively short, stout bones, improving both their resistance to mechanical forces and providing a mechanical advantage via a reduced out-lever length. There has been an increase in the absolute volume of muscles employed during digging, thereby increasing the magnitude of the in-force. Increased in-lever lengths have been achieved via the migration of muscle insertions, including the elongate olecranon for the insertion of the m. triceps brachii, and the distal migration of the humeral attachments of the teres major, latissimus dorsi and superficial pectoral muscles.