Interactions of sperm whales (Physeter macrocephalus) and killer whales (Orcinus orca) with Patagonian toothfish (Dissostichus eleginoides) fishery operations were assessed in southern Chile during surveys with observers on board industrial fishing vessels between April 2002 and March 2003. For the 180 hauls monitored, the evidence of damaged catch when cetaceans were present included toothfish lips (n = 121), heads (n = 16) and trunks (n = 3). The mean rate of depredation was 3% (±2% CI 95%; n = 180 sets) and ranged between 0 and 100%. Considering that no interactions were recorded in 153 (84%) of the effectively monitored sets, and that the mode and median of the depredation rate was 0, the global impact of cetaceans on the fishing yield is considered to be low. When mixed sightings of killer and sperm whales were encountered (n = 12), the rate of depredation decreased to 0%; this could be the result of killer whales preferring to predate on sperm whales rather than on the fish caught on the line, as suggested by the response of sperm whales to the presence of killer whales (grouping into tight parallel formations). High sperm whale densities were found to be associated with various ‘hotspots’ which had high fishing yields. This relationship tends to support the hypothesis that the richest fishing grounds are also traditional feeding grounds for sperm whales. Financial loss associated with operational interactions involving depredation was US$92 684 (CI 95% US$47 302–153 745) for the whole fleet, with a mean loss per set of US$138 (CI 95% US$74.76–249.3).