In a prison in Victoria, Australia, our objectives were contact tracing of inmates and staff at risk of exposure to an identified index case; and to determine risk factors for prevalent and incident infection. Inmates and staff who were potentially exposed to the index case were screened with a Mantoux skin test and a questionnaire. Inmate movements within the prison were compared to movements of the index case. Logistic regression was used to determine risk factors for infection. The index case had smear positive, cavitating pulmonary tuberculosis (TB), which was undiagnosed for 3 months. This was the period of potential exposure. The prevalence of positive skin test reactions in 190 inmates and staff at the prison was 10%. Significant predictors of a positive skin test were being an inmate (odds ratio (OR) 15·5), older age (OR 8·3) and being born overseas (OR 10·7). Bacille Calmette Guerin (BCG) vaccination, proximity to the index case in various prison sites, duration of incarceration, number of incarcerations and number of inmates per cell were not significant. There were three recent skin test conversions from negative to positive, representing a conversion rate of 3·5%. We did not find evidence of significant transmission of TB from a single index case. The prevalence of infection in this Australian prison was lower than published rates in other countries. Better prison conditions and different demographics of prison inmates in Australia may explain these differences.