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Indicator species have been used for several decades as measures of ecosystem health. In arid Australian rangelands, which are dominated by commercial grazing enterprises reliant on native pastures, the development of efficacious indicators is particularly important to monitor production and biodiversity values. The high temporal and spatial climatic variability of arid rangelands means that developing broad indicators is difficult and resource intensive. However, pastoralists, who observe their pastures and the species favoured by stock under a range of conditions, can provide information on local indicators. This paper examines pastoralists’ knowledge in terms of its value for natural resource management in rangelands, including their use of local indicators and understanding of palatability of selected plant species. A survey was mailed to all 51 occupants of pastoral properties in the Stony Plains region of South Australia. Pastoralists were asked what species they considered indicators of overgrazing, whether they would destock if they noted changes in these indicators, what they knew of the palatability of certain plant species, and the usefulness of cracking-clay areas (a key landscape feature in the region) for grazing. Views of respondents on indicator species and plant palatability mostly concurred with published reports on the preferences of livestock for these species. A wide range of indicators (all perennial plant species and no animal species) was listed by respondents, suggesting that indicators are highly location-specific, plant-focussed, and not viewed consistently among pastoralists. Respondents related specific information about cracking-clay areas on their leases, including the influence of the timing and amount of rainfall on pasture productivity, and the value of these areas for livestock. It can be difficult for natural resource management practitioners, who may not observe the landscape regularly, to evaluate land condition and prescribe appropriate land management strategies. It is argued that the participation of pastoralists in science and policy development is fundamental to achieving sustainable land management, providing opportunities for social learning within an adaptive management framework.