The uptake of telehealth into the ongoing and routine operations of healthcare has been slow, uneven and fragmented. Research has focused on the initial adoption and diffusion of telehealth, with much less known about sustainability. This study made a qualitative inquiry into the sustainability of a diverse sample of ceased and continuing telehealth services in Australia, asking why services ceased, and how continuing services were either vulnerable or sustainable. Fifty four Australian telehealth services were identified in the academic literature over a ten year period between 1998 and 2007. A sample of these was chosen for maximum variation, and 36 semi-structured interviews were conducted concerning 35 telehealth services. Of these services, 8 had ceased, 14 were vulnerable, 10 sustainable, and 3 could not be classified. The major theme from ceased services was lack of support and insufficient demand from participating sites. Vulnerabilities identified from operating sites were reliance on a single person, low levels of interest, short-term funding, and difficulties making the transition from research to service. Sustainable services had two main models of functioning: to reach a sufficient size and flow of referrals to justify dedicated staffing, coordination and infrastructure; or, to fit a lower level of telehealth activity into an existing clinical setting. Sustainability of telehealth services can be enhanced by choosing an operating model appropriate to the size of the service, meeting the needs of and developing good relationships with referring services, raising awareness, and succession planning.