Australia has experienced significant reductions in smoking rates in recent decades, and public health scrutiny is turning to how further gains will be made. Regulatory controls, such as licensing to reduce retailer density or limit tobacco proximity to schools or licensed premises, have been suggested by some public health advocates as appropriate next steps. This paper summarises best-practice evidence in relation to tobacco retailer regulation, noting measures undertaken in New South Wales (NSW). Research on controlling the display of tobacco products and supply of tobacco to minors is well established. The evidence shows that a combination of licensing, enforcement, education, promotion restrictions at the point of sale and a well-funded compliance program to prevent sales to minors is a best-practice approach to tobacco retail regulation. The evidence for other measures - such as restricting the number of retail outlets, and restricting how and where tobacco is sold - is far less developed. There is insufficient evidence to determine if a positive licensing system and controls on the density and location of tobacco outlets would be effective in the Australian context. More evidence is required from jurisdictions that have implemented a positive licensing scheme to evaluate the effect of such schemes on smoking rates, the potential cost benefits and any unintended consequences.