There has been an ongoing debate in Australia and internationally regarding the effectiveness of bicycle helmets in preventing head injury. This study aims to examine the effectiveness of bicycle helmets in preventing head injury amongst cyclists in crashes involving motor vehicles, and to assess the impact of ‘risky cycling behaviour’ among helmeted and unhelmeted cyclists. This analysis involved a retrospective, case-control study using linked police-reported road crash, hospital admission and mortality data in New South Wales (NSW), Australia during 2001 to 2009. The study population was cyclist casualties who were involved in a collision with a motor vehicle. Cases were those that sustained a head injury and were admitted to hospital. Controls were those admitted to hospital who did not sustain a head injury, or those not admitted to hospital. Standard multiple variable logistic regression modelling was conducted, with multinomial outcomes of injury severity. There were 6,745 cyclist collisions with motor vehicles where helmet use was known. Helmet use was associated with reduced risk of head injury in bicycle collisions with motor vehicles of up to 74%, and the more severe the injury considered, the greater the reduction. This was also found to be true for particular head injuries such as skull fractures, intracranial injury and open head wounds. Around one half of children and adolescents less than 19 years were not wearing a helmet, an issue that needs to be addressed in light of the demonstrated effectiveness of helmets. Non-helmeted cyclists were more likely to display risky riding behaviour, however, were less likely to cycle in risky areas; the net result of which was that they were more likely to be involved in more severe crashes.