Genetic rescue is potentially a powerful strategy for increasing population fitness and resilience in threatened marsupials. A captive-breeding program began for the Victorian eastern barred bandicoot (Perameles gunnii) in 1988 to prevent extinction of this species on mainland Australia. While the program was successful, the low number of founding animals and ongoing captive breeding resulted in a significant loss of genetic diversity for this species. To counter this loss of genetic variability, we bred Victorian eastern barred bandicoots with genetically diverse Tasmanian populations of the subspecies Perameles gunnii gunnii at the Mt Rothwell Conservation Reserve in Victoria. The Tasmanian populations were able to successfully cross with the Victorian population to produce three generations of healthy offspring. The offspring developed rapidly and have been released into large fenced areas at Mt Rothwell. The results have been so promising for the eastern barred bandicoot that we now have the confidence to continue outbreeding across other mainland populations at Phillip Island, Woodlands, Hamilton Conservation Reserve, French Island and Tiverton Sanctuary. Our results show how genetic mixing can benefit threatened species; however, it is essential that it be carefully coupled with habitat restoration and threat mitigation.