Fragmentation theory predicts that population persistence should be positively correlated with the size of habitat fragments. The patterns of occurrence of many species are consistent with this prediction, but the demographic processes that determine how species respond to fragmentation are poorly understood. In addition, habitat quality may interact with fragment size as an influence on demographic performance. We investigated these predictions for the native bush rat Rattus fuscipes by testing the following hypotheses: 1) population performance (i.e. viability as determined by various demographic parameters) is positively correlated with fragment size; and 2) population performance is positively correlated with habitat quality. Populations of R. fuscipes were censused in two large (>49 ha) and eight small (<2.5 ha) forest fragments in an agricultural region of southeastern Australia. Fragments with high and low quality habitat were included in each size category. Fragment size influenced multiple aspects of population demography; populations in large fragments had higher densities, older age structures, received more potential immigrants, and were more likely to recruit adults than those in small fragments. Reproductive patterns were more predictable in large fragments. Habitat quality per se had less marked effects; adult females were heavier and subadults more prevalent in fragments with high quality habitat. However, high quality habitat enhanced population performance in small fragments more so than in large ones. Despite being widespread in the study area, R. fuscipes populations are profoundly impacted by habitat fragmentation, with population performance declining with fragment size. Studies based on patterns of species occurrence should be interpreted with caution as they may mask critical processes occurring at the population level. For a thorough understanding of the effects of habitat fragmentation, population-level studies are required.