In 15 combinations of growing sandalwood with other plant species the incidence of insect pests and their predators were observed for two years from 2014 to 2015 in Karnataka. The more diversified areas recorded more species of insect pests and natural enemies but the severity of the infestations were less and resulted in no insecticidal application. In less diversified areas the severity of sap suckers and stem borers were more often seen and resulted in undertaking control measures. An analysis of sapsuckers and defoliators with the natural enemies like coccinellids, mantids and spiders showed positive linear relationship between pest and predators. The findings demonstrated that habitat diversification in growing sandalwood is an ideal option to manage the insect pest problems.