The marsupial brushtailed phascogale Phascogale tapoatafa is a solitary, hollow-dependent, arboreal insectivore that occurs at low densities in open forests and woodlands of Australia. Data gathered from nest box surveys (4 years), and from radio-tracking phascogales to nest sites (3 years) in south-western Australia confirm solitary nesting after dispersal. However, in the winter of a single year, nest box surveys in one study area showed that 56% of individuals were nest sharing. On a neighbouring site, 81 group nests were also recorded among 18 radio-collared individuals. In both areas, groups comprised two to four individuals of any age/sex combination. The same phascogales tended to nest together and in a number of different sites. Nest sharing between females was restricted to territory boundaries and continued after the annual die-off of the males. Nest sharing coincided with prolonged drought conditions and in this year mature phascogales were significantly smaller than normal, i.e. males 25% less in weight, females 12% less. Communal nesting seemed to be a response to thermoregulatory difficulties posed by the three interrelated factors of low body mass, declining temperatures and declining food availability. Nest sharing in this species appeared to be a behavioural indicator of an energetics crisis, there was a population decline during the drought period and a population crash in the following year.