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Evaluating the effectiveness of protected areas for sustaining biodiversity is crucial to achieving conservation outcomes. While studies of effectiveness have improved our understanding of protected-area design and management, few investigations (< 5%) have quantified the ecological performance of reserves for conserving species. Here, we present an empirical evaluation of protected-area effectiveness using long-term measures of a vulnerable assemblage of species. We compare forest and woodland bird diversity in the Australian Capital Territory over 11 yr on protected and unprotected areas located in temperate eucalypt woodland and matched by key habitat attributes. We examine separately the response of birds to protected areas established prior to 1995 and after 1995 when fundamental changes were made to regional conservation policy. Bird diversity was measured in richness, occurrence of vulnerable species, individual species trajectories and functional trait groups. We found that protected areas were effective in maintaining woody vegetation cover in the study region, but were less effective in the protection of the target bird species assemblage. Protected areas were less species rich than unprotected areas, with significant declines in richness across sites protected prior to 1995. Small, specialised and vulnerable species showed stronger associations with unprotected areas than protected areas. Our findings indicate that recently established reserves (post-1995) are performing similarly to unprotected woodland areas in terms of maintaining woodland bird diversity, and that both of these areas are more effective in the conservation of woodland bird populations than reserves established prior to 1995. We demonstrate that the conservation value of protected areas is strongly influenced by the physical characteristics, as well as the landscape context, of a given reserve and can diminish with changes in surrounding land use over time. Both protected areas and off-reserve conservation schemes have important roles to play in securing species populations.