The article briefly outlines the history of the application of mediation to planning and environmental disputes in Victoria and more widely in Australia and overseas. The Muckatah Drainage Scheme is one of the largest public disputes to be mediated in Australia, with up to 40 people at the mediation representing over 400 individuals and several government agencies. The article outlines the background to the dispute, the premediation process, the mediation process itself and the agreement that was reached at the end. The significant challenges presented by this type of dispute are explored (for example, defining the boundaries of the dispute, managing the great variety and complexity of issues, satisfying the public interest, and incorporating mediation within the formal planning process) and some key findings are drawn about experience which may be applicable to the management of other environmental disputes. The Muckatah Drainage Scheme experience has demonstrated that a large, complex, multi-party planning and environmental dispute, set within the formal statutory planning process, is amenable to mediation.