Universities, health services and health students have a vested interest in the development of work-ready graduates to improve employment prospects, standards of practice and healthcare outcomes. Work integrated learning supports the transition of theoretical knowledge into professional practice, thus preparing students for their work following graduation. The positive impact of practice experiences on work-readiness and employability is largely assumed. This paper describes the impact of participation in a rural Australian service-learning program on student and academic perceptions of work-readiness and future employability. Qualitative data was gathered from allied health students who participated in inter-professional focus groups and allied health academics who participated in individual interviews. The findings indicate that students were challenged in transitioning from being observational or highly directed learners, described as [being in the] 'shadows' or 'shadowing', to semi-autonomous healthcare providers. Participants reported enhanced perceptions of future employability through 'real work' experiences and identified broader program implications for universities and students. Based on participant experiences, service-learning, a relatively new educational pedagogy in rural health education in Australia, may provide universities, health services, and students with an alternative to acute hospital placements in the development of work-ready attributes for new graduate allied health practitioners.