This paper will be dealing with the area of linguistics known for its creativity and playfulness, especially in Australian English. That is of course, subject of diminutives with the major emphasis on hypocoristics of place-names. After giving a brief introduction on this subject and a few crucial historical facts about Australian English and its progress since the settlement, we will be dealing with the form and function of diminutives generally and, what is more important, with the diminutives, especially hypocoristics in Australia. After giving a short introduction we can conclude that the diminutives form an open class category in Australian English and many are becoming part of a formal style. Australians do not view the usage of diminutives as irritating; they see it as a sign of having become a member of a particular in-group. Australian English has a unique set of diminutives formed by adding -o or -ie (-y) to the ends of (often abbreviated) words. There does not appear to be any particular pattern to which of these suffixes is used. When dealing with hypocoristics we can say that many formations are used in informal speech or restricted to particular trades, but some have made their way into common use. The vast majority of hypocoristic forms involve nouns, which are frequently created from verbs, particularly with the suffix –ie, e.g. floaties Hypocoristic adjectives (apart from those which are also used as nouns, such as prezzie/presbie, presbo ‘Presbyterian’) are less often coined. Examples include bosker ‘fine’, blokey, blokesy, bolshie, and pissy. There are three major functions of hypocoristics and they are to maintain good relationship with people, the adult-to-child relationship and adult relationship with other adults. Hypocoristic place names, names of national sportspeople, and national figures are used widely in newspapers, but the semantic domain information is important in showing tendencies for particular endings to occur in particular domains. The most notable finding is that hypocoristics in -ie are the most common. When talking about formation we can say that the full form is added to a template and necessary changes are made (truncation, suffixation) for the form to fit the template. In the end we can conclude that diminutives represent very important class in English, Australian English especially and they are slowly but surely making a progress.