Observer-based estimates of the catches and by-catches from prawn seining (locally termed ‘snigging’) in Tuggerah Lake (NSW, Australia) during the 1998/99 fishing season are presented. Observed catches included three species of penaeid prawns, while observed by-catches contained a total of 49 finfish and 5 invertebrate taxa. The overall by-catch:prawn catch ratio by weight was 0.9:1, and in catching an estimated 20 ± 4 t of prawns the fleet took an estimated total by-catch of ± 2 t throughout the 6-month fishing season. The by-catch included large numbers of small (<15 cm total length) finfish species important in other commercial and recreational fisheries, including Gerres subfasciatus,Rhabdosargus sarba and Acanthopagrus australis, as well as several small demersal species of little economic value. Multivariate analyses indicated that by-catch composition differed between seines taken over shallow seagrass and bare substrata, with catch rates of several species being greater over seagrass. It is recommended that strategies to reduce potential ecological impacts and by-catch in this fishery be investigated, including fixed spatial closures over seagrasses and the development of alternative fishing gears and practices.