Mycosphaerella species are fungal leaf pathogens of Eucalyptus globulus, one of the major plantation tree species in temperate regions of the world. We examined the quantitative genetic variation in susceptibility to infection by Mycosphaerella nubilosa in a genetically diverse population of E. globulus families growing in a field trial in north-west Tasmania. Disease incidence and severity were assessed on juvenile foliage following a heavy epidemic where mean leaf area damage was 34%. Disease incidence was uniform across the trial. Significant genetic variation for susceptibility was detected with a narrow sense heritability of disease severity being the highest yet reported (h² = 0.60) for a Mycosphaerella disease of eucalypts. M. nubilosa damage had a significant deleterious effect on tree growth at both the phenotypic and genetic level. We suggest that E. globulus has at least two mechanisms involved in avoiding the deleterious effects of this disease, one is through resistance of the juvenile foliage per se and the other is through the ontogenetic switch to the resistant adult foliage. There is ample opportunity to select genotypes of E. globulus that are relatively resistant to damage and if these are deployed in areas of high disease risk, significant benefits in plantation productivity could be obtained.