Food-based Dietary Guidelines (FBDGs) promote healthy dietary patterns. Nutrient-based Front-of-Pack Labelling (NBFOPL) schemes rate the 'healthiness' of individual foods. This study aimed to investigate whether the Australian Health Star Rating (HSR) system aligns with the Australian Dietary Guidelines (ADGs). The Mintel Global New Products Database was searched for every new food product displaying a HSR entering the Australian marketplace from 27 June 2014 (HSR system endorsement) until 30 June 2017. Foods were categorised as either a five food group (FFG) food or 'discretionary' food in accordance with ADG recommendations. Ten percent (1269/12,108) of new food products displayed a HSR, of which 57% were FFG foods. The median number of 'health' stars displayed on discretionary foods (2.5; range: 0.5-5) was significantly lower ( < 0.05) than FFG foods (4.0; range: 0.5-5), although a high frequency of anomalies and overlap in the number of stars across the two food categories was observed, with 56.7% of discretionary foods displaying ≥2.5 stars. The HSR system is undermining the ADG recommendations through facilitating the marketing of discretionary foods. Adjusting the HSR's algorithm might correct certain technical flaws. However, supporting the ADGs requires reform of the HSR's design to demarcate the food source (FFG versus discretionary food) of a nutrient.