Increases in soil acidification have led to large increases in the application of aglime to Australian agricultural soils. The addition of aglime has the potential to increase greenhouse gas (GHG) emissions due to the release of CO₂ during the chemical dissolution of aglime and due to pH-induced changes to soil biological processes. Currently, Australia’s GHG accounting system assumes that all the carbon contained in aglime is released to the atmosphere during dissolution in accordance with the Tier 1 methodology of the IPCC. However, a recent approach by TO West and AC McBride has questioned this assumption, hypothesising that a proportion of the carbon from riverine-transported aglime may be sequestered in seawater. In addition, there is presently no capacity within Australia’s carbon accounting system to quantify changes to GHG emissions from lime-induced changes to soil biological processes. Therefore, the primary objective of this review was to examine the chemical and biological processes occurring during the application of aglime and the subsequent fluxes in CO₂, N₂O, and CH₄ from soil, with particular reference to the Australian environment. Estimates for CO₂ emissions from aglime application in Australia using the contrasting methodologies of the IPCC and West and McBride were compared. Using the methodology of the IPCC it was determined that from the aglime applied in Australia in 2002, 0.995 Tg of CO₂ would have been emitted, whereas this figure was reduced to 0.659–0.860 Tg of CO₂ using the methodology of West and McBride. However, the accuracy of these estimates is currently limited by poor understanding of the manner in which aglime moves within the Australian landscapes. In addition, there are only a very small number of Australian studies that have examined the effect of aglime on GHG emissions due to changes in soil biological processes, limiting the ability of Australian modellers to accurately incorporate these processes within the carbon accounting system.