Here we describe the most plesiomorphic koala yet known. Priscakoala lucyturnbullae, gen. et sp. nov., is the fourth and largest koala species described from Miocene deposits in the Riversleigh World Heritage area, northern Australia. It is known from a maxilla with M1–3 and isolated M2, M3 or M4 and m1. Relationships within the diprotodontian suborder Vombatiformes are clarified using cranial and dental characters based on a data set compiled from new and more complete cranial materials for each of the respective vombatiform families. Monophyly of Phascolarctidae is supported by the development of a protostylid and metastylid on m1. Priscakoala lucyturnbullae is the most plesiomorphic phascolarctid. Inclusion in the analysis of the enigmatic Pliocene genus Koobor, currently classified as Vombatiformes incertae sedis, indicates phascolarctomorphian affinities for the genus.