The pervasive influence of island biogeography theory on forest fragmentation research has often led to a misleading conceptualization of landscapes as areas of forest/habitat and ‘non-forest/non-habitat’ and an overriding focus on processes within forest remnants at the expense of research in the human-modified matrix. The matrix, however, may be neither uniformly unsuitable as habitat nor serve as a fully–absorbing barrier to the dispersal of forest taxa. In this paper, we present a conceptual model that addresses how forest habitat loss and fragmentation affect biodiversity through reduction of the resource base, subdivision of populations, alterations of species interactions and disturbance regimes, modifications of microclimate and increases in the presence of invasive species and human pressures on remnants. While we acknowledge the importance of changes associated with the forest remnants themselves (e.g. decreased forest area and increased isolation of forest patches), we stress that the extent, intensity and permanence of alterations to the matrix will have an overriding influence on area and isolation effects and emphasize the potential roles of the matrix as not only a barrier but also as habitat, source and conduit. Our intention is to argue for shifting the examination of forest fragmentation effects away from a patch-based perspective focused on factors such as patch area and distance metrics to a landscape mosaic perspective that recognizes the importance of gradients in habitat conditions.