Simple SummaryKoala retrovirus (KoRV) is a significant threat to koalas across Australia. Koalas in northern koala populations (from New South Wales and Queensland) have KoRV inserted into their DNA and inherited to their offspring. Southern koala populations (from Victoria and South Australia) have KoRV infection spread through close contact of koalas. As such, there are koalas within South Australia that are not infected with KoRV. Accurate diagnosis of the infection of each koala is therefore fundamental for disease studies. Previous studies have shown differences in prevalence of different KoRV genes in the Mount Lofty Ranges Koala population; therefore, clarification is necessary. This study uses a large cohort (n = 216) and defines the diagnostic regions of the KoRV genome within the South Australian population. Using multiple molecular techniques, it demonstrates strong evidence for two clear groupings of koalas: KoRV positive and KoRV negative. Within this study, a population of 41% were shown to be KoRV positive and 57% were KoRV negative, with 2% inconclusive. This differentiation is of great importance when examining the clinical importance of KoRV infection within southern koalas.Koala retrovirus, a recent discovery in Australian koalas, is endogenised in 100% of northern koalas but has lower prevalence in southern populations, with lower proviral and viral loads, and an undetermined level of endogenisation. KoRV has been associated with lymphoid neoplasia, e.g., lymphoma. Recent studies have revealed high complexity in southern koala retroviral infections, with a need to clarify what constitutes positive and negative cases. This study aimed to define KoRV infection status in Mount Lofty Ranges koalas in South Australia using RNA-seq and proviral analysis (n = 216). The basis for positivity of KoRV was deemed the presence of central regions of the KoRV genome (gag 2, pol, env 1, and env 2) and based on this, 41% (89/216) koalas were positive, 57% (124/216) negative, and 2% inconclusive. These genes showed higher expression in lymph node tissue from KoRV positive koalas with lymphoma compared with other KoRV positive koalas, which showed lower, fragmented expression. Terminal regions (LTRs, partial gag, and partial env) were present in SA koalas regardless of KoRV status, with almost all (99.5%, 215/216) koalas positive for gag 1 by proviral PCR. Further investigation is needed to understand the differences in KoRV infection in southern koala populations.