The reasons of rapid development of cover-collapse sinkholes near Railton, Tasmania were investigated after sinkholes first appeared in a mature pine plantation in 2011. Sinkhole monitoring, dye tracing, chemical analyses of stream water and field observations indicated that large sinkholes in Quaternary alluvium overlying Ordovician limestone resulted from deepening of a limestone quarry south of the plantation. Intersection of a cave system during quarrying lowered the local water table, initiated streamsinks, and caused streams that previously flowed north towards the Mersey River to flow south to the quarry, via streamsinks and reactivated subsurface channels. Concurrently, the thickness of the vadose zone in thick Quaternary sediments overlying the limestone increased, hydraulic support for the sediments decreased, and numerous cover-collapse sinkholes formed. Chemical data including isotope analyses confirmed that the local aquifer is mainly recharged after high winter rainfall during high stream flow, when a proportion of the water in surface streams also flows directly northwards to the Mersey River. During low (summer) flow most water in surface streams flows into streamsinks and south into the quarry via the cave system. It is then pumped to a surface stream running north through the area in question, returns into the cave system via streamsinks and sinkholes, and finally returns to the quarry. The study demonstrates that water-table lowering by quarrying in limestone is not confined to cones of depression but may extend for kilometres if relict subsurface stream channels are intersected. In this area, the rapid development of cover-collapse sinkholes presents risks to infrastructure (a railway line, an electricity transmission line, and roads); to stream biodiversity because of altered water flow duration and water quality; to the safety of forest contractors, particularly those using heavy machines; and to the future use of presently productive land for economic return.