During the 1980s and early 1990s, the New Zealand economy went through radical economic changes, overhauling almost all aspects of economic policy. The New Zealand Forest Service was not exempt from these changes. This paper describes two major aspects of that change: the way the New Zealand Forest Service, like many other state trading activities, was restructured first through corporatisation under the State-Owned Enterprises Act 1986 which has ultimately led to privatisation; and secondly through the enactment of the New Zealand Resource Management Act 1991 which has fundamentally altered environmental management in New Zealand. The Act's underlying principle is based on the principle of sustainable management. This principle forms the foundation of forest management in New Zealand. Whether the restructuring and privatisation will produce a more efficient forestry sector is an issue that the author does not address.