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Sheep stocking rate influences farm profit significantly; however determining the optimal stocking rate is a difficult task. In this paper, we address this challenge through three main steps. First, we review the definition of stocking rate; second, we examine prior research relevant to the review topic and highlight the factors that need to be considered when determining the optimal stocking rate; and third, we make recommendations for improvements in research on establishing the optimal sheep stocking rate. Inconsistency in the definition of stocking rate can lead to miscommunication among researchers, advisers and farmers. If 10 dry sheep equivalents (DSE)/ha is optimal for one flock, it may not be optimal for another flock because the DSE measure does not fully capture the nuances of different patterns of nutritional requirements among sheep classes and feed availabilities and their respective prices and costs. The optimal stocking rate occurs when the marginal economic benefit of an additional animal equals its marginal cost. Determining this point requires an understanding of the quantity and quality of feed available throughout the year, the optimal liveweight profile throughout the year, the impact of seasonal variation, the impact of labour availability, the cost of alternative feeds, prices of livestock and livestock products, the risk preferences of the farmer, and any emission policies relating to greenhouse gases. Farmers tend to use their own judgement to set their stocking rates, with the aim of maximising utility. However, the complexities listed make it a challenging task. Thus, researchers have used various simulation and programming models to aid decision-making over optimal stocking rates, but most farmers continue to rely on their own personal judgement. Moreover, often a focus of this modelling is for sheep systems in eastern Australia. Generalising this research across Australia is difficult due to differences in climatic conditions and markets across Australia. Often farmers are unaware of the profits they are foregoing when choosing either an overly conservative or excessive stocking rate. Our research has shown that foregone income of up to AUD50 per hectare can occur when a stocking rate 30% below or above the optimum is selected. Thus, despite the complexities that underpin the stocking rate decision, we believe that there are potential rewards from further research on the optimisation of stocking rates. [ABSTRACT FROM AUTHOR]