Gray and fox squirrels show similar preferences for various types of natural foods. Their preferences are based on a combination of two factors; the speed with which they can ingest food energy and the digestibility of the food eaten. The two species of squirrels have essentially the same ability to digest their natural foods. However, five species of nuts differ in their digestibility, ranging in percentage of energy assimilated from about 78% for white oak to 95% in shagbark hickory. The squirrels' efficiency in digesting the kernels of different species of nuts is correlated with the lipid content of the kernels. The niche differences between gray and fox squirrels are not based on food preference or feeding efficiency. Instead, they are probably related to differences in foraging behavior and predator escape behavior which adapt fox squirrels to open forests and forest edges and gray squirrels to dense forests. The annual activity pattern of gray and fox squirrels make the hard—shelled nuts of hickory and walnut the most efficient food in fall and spring and acorns the most efficient food in winter. This change in the relative efficiency of foods results in the squirrels acting as dispersing agents for the seeds of both oaks and hickories in mixed stands of trees.