Abstract Habitat usage characteristics of two species of native murid rodents, Pseudomys gracilicaudatus and Rattus lutreolus were investigated on an area of coastal heathland at Myall Lakes National Park. A grid of 151 trap stations comprising 17 traplines was positioned across a mosaic of habitats. At each trap station 19 structural vegetation and physical variables known to affect the microdistribution of small mammals were measured. Multivariate statistical procedures identified those microhabitat variables that contribute to individual species' habitat use and habitat partitioning, and reduce potential competition for space. Cluster analysis classified trap stations into one of six habitat types that were mapped on the study area, identifying a heterogeneous assemblage of interlocking habitats. The pattern is a consequence of topographic variation on the site and, to a lesser extent, its fire history. Trapping results show P. gracilicaudatus and R. lutreolus exhibit similar macrohabitat selection, preferring topographically low habitats, with both species predominantly occupying short dense heath with dense sedge cover. The high overlap in macrohabitat use is greatly reduced when considered trap station by trap station, so that discriminant function and multiple regression analyses demonstrate marked microhabitat selection. Elevation was a highly significant variable, accounting for 41% and 27% of the variance in the habitat used by P. gracilicaudatus and R. lutreolus, respectively. This variable represents a soil moisture gradient that determines changes in the floristic and structural components of the biotic environment. Two other structural vegetation variables and vegetation height contributed 30% of the variance in P. gracilicaudatus distribution. Sedge cover was found to be significant and explained 13% of the variance in R. lutreolus distribution. Withinâhabitat separation was explained best with a linear combination of variables in a discriminant function, rather than by any single variable. Differential microhabitat selection, interference competition and diet separation appear to be the major factors facilitating coexistence of these two species.