Australian multiculturalism – an integrative policy strategy aiming at managing cultural diversity – was adopted as government policy in Australia in the 1970s. In its original rendition, Australian multiculturalism was embedded in classical sociological theory, integrative, reciprocal, egalitarian and respectful of the majority. However, it has also been confused with ethnic pluralism and assimilationist ‘melting pot’ approaches, and these confusions are apparent in the recent European and domestic criticisms. The article outlines the principles of Australian multiculturalism, identifies its theoretical foundations, and highlights some of the popular confusions about its meaning, focus and objectives.