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Deforestation threatens the earth's biodiversity and the ecosystem services upon which humans depend. Formal regulation is a key mechanism by which governments seek to protect forests. However, whether regulation can effectively protect remaining areas of the most threatened and most heavily cleared forests is unknown. We addressed this question using forest loss data for Queensland, Australia between 2000 and 2014 under existing vegetation clearing regulation ( Vegetation Management Act 1999 ). This regulation is specifically designed to provide the greatest protection for threatened forest types that have already lost the greatest amount of their original extent. Importantly, enforcement and governance of this regulation is relatively strong allowing an assessment of regulation design. We applied path analysis to model the direct and indirect effects (mediated by variables representing deforestation pressure) of forest protection level on clearing rates. There was strong evidence for a decline in clearing rates over time, except of clearing for non-agricultural purposes. However, threatened forest types, which have already lost > 70% of their original extent and should have the greatest level of protection under the regulation, continue to be cleared 2.7–2.9 times faster than non-threatened forest types. There was also little evidence that the regulation has driven greater reductions over time in the clearing rates of threatened versus non-threatened forests types. There was much greater support for the indirect than direct effect of protection level. This is because protection level was correlated with variables associated with deforestation pressure, resulting in higher clearing rates for threatened compared to non-threatened forest types. We hypothesise that this arises because the additional protection afforded to threatened relative to non-threatened forests is insufficient to counter the continuing higher level of deforestation pressure on threatened forests. We argue that a potential solution is to build explicit targets for forest retention into regulation, below which no further forest loss is permitted. This could be combined with spatially targeted enforcement and incentive strategies where threats are highest. [ABSTRACT FROM AUTHOR]