We tested the efficacy of a Mustad underwater setting funnel to reduce seabird bycatch in a demersal longline fishery for Patagonian toothfish Dissostichus eleginoides. The funnel, which deploys the longline 1-2 m beneath the sea surface, was used on 52% of 1714 sets (total effort 5.12 million hooks) over a two-year period. There was no evidence for lower catches or significantly higher bait loss on sets through the funnel. Overall bird bycatch rate was low (0.022 birds per 1000 hooks), and was dominated by White-chinned Petrels Procellaria aequinoctialis (88% of the 114 birds killed). Bycatch rate was three times lower when the funnel was used both by day and at night. Daytime catch rates with the funnel were less than those attained during night sets without the funnel. Underwater setting offers a significant reduction in seabird mortality and could increase fishing efficiency by allowing daytime setting. However, small numbers of albatrosses were caught during daytime sets with the funnel, and its use for daytime sets should be closely monitored.