Abstract We studied the use and selection of habitat components by two species of agamid (dragon) lizards in the Simpson Desert, Queensland, Australia. Both the military dragon (Ctenophorus isolepis) and central netted dragon (Ctenophorus nuchalis) were captured in pitfall traps surrounded by areas of open sand, but the mean coverage of spinifex (Triodia basedowii) was greater (35%) around traps capturing C. isolepis than around those capturing its congener (approx. 8%). Direct observations of free-ranging lizards confirmed that C. isolepis spent most time in, or within 30 cm of, spinifex hummocks, whereas C. nuchalis primarily perched in dead wood. Both species spent most (≥75%) of the time they were observed at rest, with little time spent feeding or moving. Ctenophorus isolepis spent 67% of its time in shade and was active in temperatures between 37.5°C and 43.3°C, whereas C. nuchalis spent 81% of its time in open sun and was active between 35.9°C and 48.1°C. Transect surveys at observation sites showed that open sand was the dominant habitat component available to both species. However, sand was under-used compared with its availability. Ctenophorus isolepis instead showed strong selection for spinifex cover and C. nuchalis for dead wood; shrub cover was little used. We discuss several mechanisms that may drive the observed pattern of habitat selection, but cannot specify which is the most important. However, the results indicate clear partitioning of habitat between the two species, and suggest that this segregation may facilitate coexistence at local and regional scales.