First seen in 1995, devil facial tumour disease (DFTD) has ravaged Tasmania's wild devils, and estimates of the impact range from 20% to as much as a 50% decline in the devil population with over 65% of the State affected.[14][15] Affected high-density populations suffer up to 100% mortality in 12–18 months.[16] The species was listed as vulnerable under the Tasmanian Threatened Species Protection Act 1995 and the Australian Environment Protection and Biodiversity Conservation Act 1999 in 2006 which means that it is at risk of extinction in the "medium term".[17][18] The IUCN does not regard the species as threatened; when this species was last evaluated for the IUCN in 1996, it was listed as lower risk/least concern.[2]

Wild Tasmanian Devil populations are being monitored to track the spread of the disease and to identify changes in disease prevalence. Field monitoring involves trapping devils within a defined area to check for the presence of the disease and determine the number of affected animals. The same area is visited repeatedly to characterise the spread of the disease over time. So far, it has been established that the short-term effects of the disease in an area can be severe. Long-term monitoring at replicated sites will be essential to assess whether these effects remain, or whether populations can recover.[15] Field workers are also testing the effectiveness of disease suppression by trapping and removing diseased devils. It is hoped that the removal of diseased devils from wild populations should decrease disease prevalence and allow more devils to survive beyond their juvenile years and breed.[15]

The cancer's origin is a mystery, but studies indicate that the animals pass it on from one to another; i.e. the cancer is contagious[19]. Short of a cure, scientists are removing the sick animals and quarantining healthy devils in case the wild population dies out[19]. Because Tasmanian devils have extremely low levels of genetic diversity and a chromosomal mutation unique among carnivorous mammals, they are more prone to the infectious cancer.[20]

Two "insurance" populations of disease-free devils are being established at an urban facility in the Hobart suburb of Taroona and on Maria Island off the east coast of Tasmania. Captive breeding in mainland zoos is also a possibility. The decline in devil numbers is also seen as an ecological problem, since its presence in the Tasmanian forest ecosystem is believed to have prevented the establishment of the Red Fox, illegally introduced to Tasmania in 2001.[16][21] Foxes are a problematic invasive species in all other Australian States, and the establishment of foxes in Tasmania would hinder the recovery of the Tasmanian Devil.

Recent research from the University of Sydney has shown that the infectious facial cancer may be able to spread because of vanishingly low genetic diversity in devil immune genes (MHC class I and II) — raising questions about how well small, and potentially inbred, populations of animals are able to survive.[22]