This study investigated the importance of habitat quality and habitat heterogeneity for the abundance and diversity of breeding birds in continuous forest and in forest fragments surrounded by farmland in central Sweden. Positive correlations were found between species number and area, volume of Aspen Populus tremula and habitat heterogeneity. Spatial segregation of habitats at a relatively fine-grained scale is suggested to allow for the co-occurrence of more species. The abundance of at least 18 of the species in this study was influenced by fragmentation, and nine of these species preferred fragments to forest sites. The total density of birds was higher in fragments than in forest sites, probably because several fragment species forage in farmland surrounding the sites and a few also forage at edges. Nine species were more common in forest sites than in fragments, but only one species was restricted to continuous forest. However, several fragments were relatively close to forests (150 m) and forest was common in larger scale contexts. The abundance of most species (25 of 33 species) in this study was correlated with habitat quality variables (i.e. variables measuring the size, volume and diversity of ‘tree species’). Among these habitat variables the most important was the occurrence of deciduous trees which seemed to be important for 14 species. The second most important habitat factor seemed to be the diameter of trees, which was positively correlated with the abundance of eight species of which five are hole-nesters. Among coniferous trees, six species were positively correlated with the volume of Norway Spruce Picea abies, whereas no species seemed to be correlated with the volume of Pine Pinus sylvestris.