Networks of protected areas are a key component of efforts to conserve biodiversity. However, there are concerns about an uncritical focus on the percentage area of reserves without an assessment of how well formal reserves are actually protecting biodiversity. In response, we completed a spatial analysis of the formal reserve system in the Australian state of Victoria. We quantified how well the reserve system captured a crude surrogate for vegetation communities (viz: Ecological Vegetation Classes) as well as distribution models for an array of threatened forest-dependent species. We found evidence of a high degree of overlap between areas subject to intensive forestry (clearcutting) operations and the modelled distribution of a suite of forest-dependent species. A key outcome of our study was that areas around sites subject to past logging as well as new areas proposed for logging under the Timber Release Plan in Victoria had significantly higher values for threatened forest dependent species (as determined by habitat distribution models) than areas that had not been logged. We found significant differences in the spatial characteristics of the dedicated reserve systems and informal protected area networks, with the latter featuring much of its area close to a tenure boundary where logging occurs. Our empirical analyses demonstrating the impacts of ongoing logging operations on areas with high environmental suitability for threatened species have important implications. In particular, the current reserve system is inadequate for a suite of forest-dependent taxa, including critically endangered Leadbeater’s Possum (Gymnobelideus leadbeateri) and the vulnerable Greater Glider (Petauroides volans). This suggests a high degree of conflict between areas of high value for conservation and areas targeted for wood production.