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Dystocia contributes to lamb and ewe mortality in the periparturient period but impacts for extensive sheep production systems remain poorly understood. Here we show that lamb and ewe mortality associated with dystocia has important impacts on sheep production in Australia and New Zealand, and quantify financial impacts for the Australian sheep industry. A systematic review of the literature identified 11 publications published since 1990 that reported sheep mortality due to dystocia in Australia or New Zealand. Assumptions for ewe breeding flock structure and reproductive performance were based on Australian sheep industry data. The proportion of lamb mortality attributable to dystocia (including stillbirths and perinatal deaths with evidence of hypoxic injury) pooled across all studies (pooled proportional mortality ratio) was 47 % (95 % Confidence Interval (CI): 38, 55). Pooled proportional mortality ratio for Australian studies was 53 % (95 %CI: 47, 60), and for New Zealand studies was 35 % (95 %CI: 19, 51). Pooled proportional mortality ratio was similar for lambs born to Merino and non-Merino ewes, although more data are needed to determine effects of ewe breed independent of other factors. Pooled proportional mortality ratio was higher for single lambs (59 %; 95 % CI: 55, 63) than twin (47 %; 41, 54) or triplet (49 %; 46, 52) lambs. However, the number of dystocia-associated mortalities is higher for twin-born lambs than for singles because total mortality is higher for twin-born lambs. It is estimated that approximately 7.7 million lamb deaths and 297,500 ewe deaths per year are attributable to dystocia in Australia for the national flock of 38 million breeding ewes. The whole-farm bio-economic Model of an Integrated Dryland Agricultural System (MIDAS) was used to determine the impacts of dystocia-associated ewe and lamb mortality on Australian farm profit. Dystocia is estimated to reduce Australian national farm profit by AU$780 million or $23.00 per ewe mated based on an assumed lamb sale price of AU$6.50 per kg carcass weight. These estimates do not include the costs of reduced productivity for surviving ewes and lambs, intervention, post-farmgate impacts, delayed genetic progress, or impacts on animal welfare and access into sheep meat and wool markets. Reducing dystocia through improved genetics and sheep management will improve animal welfare and farm profit.