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Large-scale removal of small-diameter trees (i.e. thinning from below) in boreal forest can diminish niche diversity for birds that rely on a well-developed understory for nesting and foraging. Yet, few studies have examined how reduced niche diversity in managed forests affects fitness measures in closely-related species and the ability of competing species to co-exist. We related forest thinning to population trends of the willow tit Poecile montana (declining) and its dominant competitor the crested tit Lophophanes cristatus (stable), and conducted a 3-year comparative study to determine how variation in understory spruce density differentially influences survival and reproduction in these species. In line with our prediction that crested tits would gain resource priority under conditions of reduced forest understory complexity, willow tits and their nestlings suffered a disproportionate decline in both nest and adult survival …