Biodiversity refers to the variety of all life forms —including plants, animals, fungi, microorganisms. It also includes both genetic and ecosystem diversity within terrestrial, aquatic, marine and subterranean systems.

The City of Busselton contains some significant biodiversity values of regional, state, national and international significance. 

As part of the south-west of Western Australia the City of Busselton forms part of an internationally recognised "biodiversity hotspot". Additionally, the Busselton–Augusta region has also been identified as one of 15 national biodiversity hotspots within Australia. Biodiversity hotspots  acknowledge the exceptional diversity and uniqueness (endemism) of the plant species in an area, however, they also recognise the level of threat to this biodiversity resulting from a significant loss of habitat.

The City contains the Ramsar-listed Vasse-Wonnerup wetlands which provides significant migratory bird habitat.  There is an unusually high occurrence of declared rare flora (DRF) with the majority of these being endemic(i.e. they are not native to other parts of the world) to the City of Busselton. There are some 50 different vegetation complexes (types) present within the City. For many of these complexes, only 30% or less of their original cover remains, making them endangered or critically endangered.