In Malaysia the response to illicit drug use has been largely punitive with the current goal of the Malaysian government being to achieve a drug-free society by 2015. This paper outlines the results of a desk-based situation assessment conducted over a 3-week period in 2004. Additional events, examined in 2005, were also included to describe more recent policy developments and examine how these came about. Despite punitive drug policy there has been a substantial rise in the number of drug users in the country. Over two-thirds of HIV/AIDS cases are among injecting drug users (IDUs) and there has been an exponential rise in the number of cases reported. Further, data suggest high risk drug use practices are widespread. Harm reduction initiatives have only recently been introduced in Malaysia. The successful piloting of substitution therapies, in particular methadone and buprenorphine, is cause for genuine hope for the rapid development of such interventions. In 2005 the government announced it will allow methadone maintenance programmes to operate beyond the pilot phase and needle and syringe exchange programmes will be established to serve the needs of IDUs.