This study investigates the factors influencing the adoption and diffusion of Knowledge Management Systems (KMS) in Australia. The study uses a mixed methodology approach. The research was carried out in three stages: field study, pilot survey, and national survey (top 1,500 companies). The data of the national survey was analysed through Structural Equation Modelling approach (LISREL). Results indicate that “Individual factors” and “Task complexity” are the significant factors which influence the “Perceived usefulness” of KMS, which in turn significantly influences the “Intention” to adopt KMS and its diffusion process. Some unexpected results are also revealed. The results provide practical suggestions to those companies that are embarking on the adoption and diffusion of knowledge management systems in Australia or elsewhere.