The most serious threat to the status of harbour porpoise (Phocoena phocoena) is incidental mortalities caused by entanglement in fishing gear. As part of an ongoing study to evaluate the utility of mitigation techniques to reduce such harbour porpoise mortalities, observers were placed on-board vessels participating in the lower Bay of Fundy demersal gillnet fishery from 1998-2001. The number of vessels participating in the fishery declined from 22 in 1998 to 13 in 2001. Despite this decline, total annual effort remained relatively stable. Over the 4-yr period, a total of 52 porpoise mortalities were observed, all but four of which were in the Swallowtail region off Grand Manan, New Brunswick. For the Bay of Fundy, total estimated by-catch was 38, 32, 28, and 73 porpoises from 1998-2001, respectively. A lack of spatial and temporal observer coverage did not allow us to generate estimates of variance in by-catch estimates. In all years, the majority of the estimated porpoise by-catch occurred in the Swallowtail region. In general, by-catch was highest in July except in 1999 when it was highest in August. The increase in by-catch seen in 2001 was due to increased catch rates rather than increased effort. While the Canadian by-catch in 2001 appears low (73 porpoises), it was nearly as high as the U.S. by-catch (80 porpoises) which has a much larger fishery. Given that the Canadian by-catch appears to represent a significant source of mortality, observer coverage should be better allocated both spatially and temporally in the future so that more reliable by-catch estimates and their associated variance can be estimated.