Significant demographic, social and economic change has come to characterise much of rural Australia, with some authors arguing there are now two sharply differentiated zones, one of growth and one of decline. This restructuring process, which has been similar to other western nations, has had a profound impact upon rural places'socially, economically and physically. Findings from research investigating the relationship between health, place and income inequality suggest that rural 'desertification', which is characterised by decline of the agricultural sector, net population loss and the deterioration of demographic structures, may negatively influence mental health outcomes in these areas. By contrast, the growth in rural areas, which is associated with expanding employment opportunities and the movement of capital and people, may confer positive benefits to mental health. The aim of this study was to investigate differences in mental health and well-being between rural communities experiencing growth and decline as measured by net population change. Utilising a survey methodology, questionnaires were distributed to 20,000 people randomly sampled from the electoral role in rural Australia. We selected four sub-regions from the sample area that were characteristic of areas experiencing population growth and decline in Australia and analysed the results of respondents from these four regions (n=1334). The analysis provided support for our hypothesis that living in a declining area is associated with poorer mental health status; however, the factors that underpin growth and decline may also be important in influencing mental health. Discussed are the mechanisms by which demographic and social change influence mental health. The findings of this study highlight the diversity of health outcomes in rural areas and suggest that aspects of place in declining rural areas may present risk factors for mental health.