This occasional paper is the fourth in a series on the National Quality Framework (NQF). This paper offers detailed insights into education and care service quality ratings for Quality Area 3 (physical environment) of the National Quality Standard (NQS). The focus is on ensuring the physical environment of a service is safe, suitable and provides a rich and diverse range of experiences that promote children's learning and development. This paper begins with an overview of the physical environment standards and what these aim to achieve, highlighting contemporary research and theory behind sustainable environments promoting children's learning. It then outlines the operational requirements of the National Law and National Regulations for the physical environment, with a particular focus on the requirements specific to different service types. The paper also describes how service approval requirements in the National Law apply to the physical environment, and how providers may seek waivers for certain legislated requirements. The paper is intended to be of interest to people who deliver education and care services, families, people who provide training and professional development services to the sector, and to officers in the state and territory regulatory authorities that regulate education and care services.