A partial skeleton (including both skull and postcranium) and referred dental material attributable to a new species of Oligo-Miocene kangaroo, Nambaroo gillespieae, are described from the Riversleigh World Heritage Area, northwestern Queensland, Australia. The holotype specimen is one of the oldest articulated fossil kangaroo skeletons yet discovered and includes the first postcranial material definitively attributable to the extinct family Balbaridae. Functional-adaptive analysis (including comparisons with modern taxa) of the hindlimb and pedal elements suggests consistent use of quadrupedal progression rather than true hopping. Robust forelimbs and an opposable first pedal digit (lost in most macropodoids) might also indicate limited climbing ability. Cladistic analysis of 104 discrete cranio-dental and postcranial characters coded for 25 ingroup and one outgroup taxon places N. gillespieae in a plesiomorphic sister clade (also containing other Balbarids and the propleopine Ekaltadeta ima) to all other macropodoids. This result supports recent revisions to the classification of kangaroos, which recognize Balbaridae as the most basal macropodoid family-level taxon.