Tropical forest fragments typically decrease in avian diversity at rates inversely related to area. However, the mechanisms by which area reduction drives avian species loss remain poorly understood. Changes in habitat area may directly lead to species loss through stochastic fluctuations of reduced populations. Alternatively, area-dependent changes in top-down and bottom-up processes associated with fragmentation may indirectly lead to accelerated avian extinctions. For example, on land-bridge islands in Lago Guri, Venezuela, fragmentation has resulted in complex changes in the biotic environments through altered abundances of nest predators and generalist herbivores. Using path analysis, we quantified the relative importance of these indirect versus direct effects of area reduction on the rates of avian species loss from 11 fragments during the period 1993–2003. Area reduction had a direct effect on species loss but this was relatively minor compared with indirect effects, especially those mediated through changes in herbivore abundances: species loss was slowed on islands occupied by hyperdense howler monkeys and accelerated on islands with leaf-cutter ants but lacking howlers. The effects of herbivores on bird species loss are likely indirect and resulting from bottom-up processes. The primacy of indirect effects at Lago Guri suggests that the loss of species from forest fragments may be driven by active biotic processes (i.e. changes in trophic structure) and is not only a passive response to reduction in habitat area per se. These findings have important implications for the design and management of reserves aimed at protecting birds and other threatened species.