The sighting of a wallaby in Dunedin is extremely concerning, the Otago Regional Council says.
A social media video allegedly showing an adult Bennetts Wallaby near Three Mile Hill was shared via Twitter.
Biosecurity New Zealand reports wallabies pose a threat to native species and primary industries by damaging native forests, tussock lands and agricultural crops.
Council's environment monitoring and operations director Scott McLean confirmed the sighting had sparked a full investigation with ground inspections.
It is the fifth sighting of a wallaby recorded by the council in the Dunedin area since 2011 - two were sighted last year.
Although the council knew wallabies spread out from the South Canterbury containment area, Mr McLean said it was a long way from other established populations.
"If wallabies were to establish in the hills around Dunedin they would be very difficult to remove and could potentially cause significant agriculture and biodiversity impacts," he said.
"A marked increase in wallaby incidence from early 2016 has lead [the council] to initiate the Otago Wallaby Project to stop wallabies from establishing."
The investigation is ongoing.