- Aim The hypothesis that habitat fragmentation negatively influences biodiversity stems from island biogeography and metapopulation theory which predict negative impacts of decreasing patch size on richness and distribution patterns. Empirical support of this idea is weak in terrestrial systems, though tests of fragmentation effects are typically confounded with landscape composition and potentially obscured by imperfect detection. Here, we used multispecies occupancy models and a mensurative experimental design to test competing hypotheses about how forest fragmentation influences distributions of breeding forest bird species and communities. Location Southern Indiana, USA. Methods During the breeding seasons of 2011-2013, we recorded over 80,000 bird detections in 202 forest fragments using a sampling design that isolated the effects of patch size per se from the effects of forest amount within a 2 km radius, edge distance, local vegetation and sampling area. We modelled the effects of these covariates on distributions of individual species categorized by ecological trait groups (i.e., forest, forest interior or forest edge), and evaluated how forest loss and fragmentation impact species richness. Results Though our results indicated little effect of patch size on total species richness, decreasing patch size had a negative effect on interior species, and a positive effect on edge species. The effects of total forest amount were much more variable, and surprisingly had a negative influence on many species, particularly cavity nesters. Main conclusions Our results do not support theoretical predictions that forest patch size should positively influence bird species richness. However, composition of bird communities shifted towards edge species from interior species with decreasing patch size. Maintaining large forest patches is thus critical for supporting forest interior species, which tend to be of the greatest conservation concern.