Long-term monitoring of the Masked Owl Tyto novaehollandiae in a semi-urban landscape before, during and after large-scale habitat removal identified a positive response in breeding activity in the short-term and a change in prey selectivity. Over the longer term, the loss in habitat had a negative impact on site fidelity. A pair of Masked Owls exhibited high fidelity to a particular breeding territory before and during the removal of large areas of habitat within this territory. Breeding success occurred over two consecutive seasons during the removal of known habitat and other disturbance events at which time the pair and their offspring were observed to exploit disturbed habitat and newly created forest edges in search of prey. Breeding activity was supported by an increased dietary focus on introduced rodents and other mammals displaced during habitat clearing. Fidelity to the breeding territory became more irregular post-disturbance and after two years the territory appeared to be abandoned. This response may suggest that the cumulative loss of habitat for established pairs as a result of urban expansion is likely to adversely affect reproductive success and site fidelity in the longer term.