Resource selection by animals is a scale-dependent hierarchical process of behavioural responses to environmental factors. Lack of information on such habitat selection dynamics can hamper the conservation management of species and habitats. For example, little is known about the space-use patterns of species in the semi-arid grasslands of peninsular India. The Indian fox Vulpes bengalensis, a poorly studied, yet reportedly widespread carnivore of the Indian subcontinent, represents an example of such lack of information. We determined the factors influencing habitat selection by Indian foxes at two levels in a multiple-use human-dominated landscape. Indian foxes are found in the highest densities in dry-grassland habitats, but are also reported to be opportunistic omnivores. Thus, we hypothesized that foxes select mainly for native grassland over human-modified habitats at a landscape level, but may not avoid human-modified habitats at the home-range level to take advantage of increased rodent availability in agricultural areas. We analysed radio-telemetry data from 32 Indian foxes using (1) a utilization distribution-weighted compositional analysis to determine the main components of home-range selection at the landscape level; (2) a discrete-choice analysis to determine the factors influencing the selection of habitat within the home ranges. At the landscape level, Indian foxes selected for native grasslands, forestry plantations and fallow land over human-dominated habitats such as agricultural land and human settlements. The presence of native grasslands was also the dominant predictor of habitat selection at the home-range scale across all seasons. Our results show that natural grasslands are the most important predictor of space use at multiple scales. This has important conservation implications as the threatened semi-arid short grasslands are poorly represented in India's protected area network. Although Indian foxes are not currently considered endangered, failure to conserve remaining native grassland habitats may threaten this species along with other grassland obligates.