Expansion of the monospecific mangrove, Kandelia obovata, has converted intertidal mudflats and other habitats into mangrove forests, thus reducing estuarine biodiversity in the Danshuei River estuary, northern Taiwan. Dense mangrove vegetation was removed to create a small patchwork of mudflats and a tidal creek in February 2007. Subsequent changes in sediment properties and biodiversity of the macrobenthos and avian communities were examined. The results showed that the creation of different habitats led to changes in sediment properties and biodiversity. The water content and sorting degree of the sediments differed significantly among the restored mudflat, the tidal creek, and the mangrove control site. Silt/clay, organic carbon content, and chlorophyll a concentrations varied seasonally, but not among sites. The abundance of polychaetes in the creek was greater than that in the mudflat or the mangrove (12.5 vs. 5.3 and 2.2 individuals/m2, respectively), suggesting preferential colonization of infaunal polychaetes in habitats with prolonged submersion. Crabs showed seasonal changes in density, with higher densities in summer than in autumn and winter. The species richness of wintering shorebirds on the created mudflat increased dramatically from 2002 to 2007. The transformation of a vegetated area into an open mudflat appeared to benefit shorebirds by providing roosting habitat. Our study demonstrated that controlling the spread of estuarine mangrove forests could increase biodiversity, and could particularly benefit the migratory shorebird community.