The red panda Ailurus fulgens is categorized as Vulnerable on the IUCN Red List. Pressurized by an expanding human population, it is mainly threatened by habitat destruction, with < 10,000 mature individuals remaining. The red panda has been studied in India, China, Nepal and, to a lesser extent, Myanmar, but no research has been published on this species in Bhutan. Here, we report on the current distribution and conservation status of the red panda in Bhutan using information gathered from field surveys, interviews and unpublished reports. Red pandas are most common at 2,400–3,700 m altitude in fir Abies densa forests with an undergrowth of bamboo. They occur in most national parks and associated biological corridors within Bhutan's protected area network, overlapping with a rural human population that is undergoing increased socio-economic development. Although culturally respected, red pandas face threats from road construction, harvesting of timber, bamboo and minor forest products, livestock grazing, inefficiently managed tourism, and domestic dogs. We believe conservation of red pandas in Bhutan requires (1) inclusion of ecologically sound principles into future development, (2) implementation of programmes that improve rural socio-economy through ecotourism and cultivation of appropriate cash crops, (3) development of education programmes that raise awareness of red pandas for rural people, (4) management of rural dog populations, (5) greater capacity building for wildlife managers, and (6) more ecological research.