'Tug' the koala has become the first rehabilitated koala to be released onto Tugalong Station.
The NSW State Government purchased the 3680 hectare property in February this year to help safeguard the koala population.
Council's koala conservation officer and coordinator of the Southern Highlands Koala Conservation ProjectMargot Law said Tug's release was a significant milestone for the new reserve.
"Tugalong Station is a really special area because it's a crucial part of the Great Western Wildlife Corridor," she explained.
"It also contains valuable Grey Eucalypt Gums which are a favoured tree of koalas."
The Great Western Wildlife Corridor is considered a crucial route for koalas moving between the Greater Blue Mountains World Heritage Area through to the Morton National Park in the Southern Highlands.
Tug first came to the attention of Council in March of this year when he was found on the side of Canyonleigh Road with Ocular Chlamydia, a disease which causes blindness if left untreated.
Since then Tug has been cared by volunteer carers Kerstin Schweth and Richard 'Woody' Woodman from Wildlife Rescue South Coast.
"Kirsten and Woody did an amazing job nursing Tug back to health," Margot said.
"This week's release is a joyous occasion for everyone involved with Tug," she added.
"By returning him to his habitat in good health, we're helping to ensure the long-term survival of this iconic Australian species."