SummaryThe concealed and widely dispersed nests of the rare and endangered Yellow-eyed Penguin Megadyptes antipodes, or “hoiho”, have been considered to reflect an essential requirement for the visual isolation of nest sites from conspecifics. However, this may be a consequence of selection for habitat features that provide protection from insolation, thereby minimising the risk of heat stress. To help improve the understanding of hoiho nesting requirements and the effectiveness of habitat restoration, we aimed to determine whether visual isolation from conspecifics or protection from insolation is the primary driver of hoiho nest site selection. We compared the mean maximum distance of visibility and the mean percentage insolation cover of active nests with randomly sampled unused sites in flax Phormium tenax and Hebe elliptica coastal scrub at Boulder Beach, and in coastal forest at Hinahina Cove, New Zealand, 2006–2007. Results of univariate tests and the evaluation of logistic regression models suggested that the amount of insolation cover was more important than visibility for hoiho nest site selection, particularly in flax and scrub. In addition, Spearman's correlations indicated that decreasing insolation cover significantly increased the visibility of nests in the forest habitat, and had a similar effect on inter-nest distance in flax. We infer that hoiho nest site selection and distribution are influenced primarily by the location and density of micro-habitat features (particularly within 1 m of the ground) that provide optimal protection from insolation, possibly along with other important features such as a firm backing structure. Strong selection for these features results in the typical but non-essential visual isolation of nest sites from conspecifics. Restoration of nesting habitats with a relatively high density and diversity of vegetation and solid structures within 1 m of the ground may eventually provide an optimal availability and quality of suitable nest sites.