More frequent hot and windy weather in fire prone forested landscapes requires that a full suite of fuel reduction measures be investigated for effectiveness in fuel hazard reduction, environmental impact and carbon (C) outcomes. Although prescribed fire and thinning are routinely applied in forests of North America to reduce fuel loads, there are few detailed studies from Australia. We report the impacts of fuel reduction treatments including burning, mechanical thinning and the combination of both on forest C and fuel hazard in open forests dominated by Eucalyptus sieberi in south-eastern Australia. Carbon losses to the atmosphere and redistribution within the forest were calculated from stocks within each fuel category before and after treatment. Mechanical thinning + burning was the most effective treatment for reducing aboveground C and fuel hazard, with major reductions in dead trees, stumps and understorey, as well as stems removed for sale as pulpwood. However forest floor fuel loads increased in thinned treatments relative to control forests. The overall fuel hazard rating in the burn only treatment was significantly reduced from extreme to low immediately following burning. In thinned only stands, the overall fuel hazard rating did not change from the pre-treatment rating of extreme, due to high surface and forest floor fuel loads and loose and flammable bark on the retained overstorey trees. This result suggests the current fuel hazard guide in use in Australia should be revised to enable it to better describe the benefits of thinning for fuel reduction - in this case the removal of about 50% of aboveground C mostly as overstorey trees, and a significant reduction in understorey, dead trees and stumps.