For large public libraries, the development of digital technologies poses challenges that have yet to be fully explored. While library sector rhetoric rightly imagines that digital technologies bring change to all aspects of library operations, it is not enough to focus on the technologies. Using the State Library of Victoria (SLV) in Australia as a case example, this paper identifies two key challenges for large public libraries in the new millennium. The first is to obtain a thorough understanding of the nature of the environment in which they operate; in particular, an understanding of the ways in which both the ecology and economy of information are changing. The second challenge is for libraries to develop a policy framework that clarifies institutional goals and brings coherence to diverse and sometimes conflicting policy demands in rapidly changing technological and service settings.