The study first summarizes the epidemiology of HIV infection and HIV-related illnesses in Australia including magnitude, distribution, transmission modes, clinical manifestations, and natural history. Information on the prevalence of HIV infection and HIV-related illness in Australian and overseas prisons is provided, and the primary risk factors for HIV transmission in prisons are identified. The study concludes that the problem of HIV infection in Australian prisons is not of the same magnitude as in Europe and America; however, the authors advise that the percentage of prisoners tested in Australia has been small, and there is no useful information available from New South Wales which is the State with the highest prison population and the highest number of AIDS cases. The study further concludes that all the preconditions for a rapid increase in HIV infection exist in Australian prisons, so there is no reasons to assume that the course of the HIV epidemic will deviate significantly from the pattern in European and American prisons. The discussion of effective policies addresses information, education, training, the use of the antibody test, the prevention of high-risk transmission activities in the prisons, occupational safety and health policies, and inmates with special needs. Recommendations are offered for addressing barriers to the implementation of effective policies. 189-item bibliography and 10 tables