Shrub encroachment is altering the structure and species composition of natural communities across the globe. However, little research has focused on how shrub encroachment influences wetland vertebrates, including small mammals. We sought to determine how vegetative structure and shrub cover influenced the occurrence of a threatened semiaquatic mammalian subspecies, the Sanibel Island rice rat (Oryzomys palustris sanibeli). We evaluated the influence of vegetation and metrics of inundation on probability of occurrence and localized seasonal colonization and extinction rates of the Sanibel Island rice rat over a 3-year period. We found Sanibel Island rice rats on 18 (33.3%) of our 54 sites. Their occurrence was positively associated with greater sand cordgrass (Spartina bakeri) cover and increased elevation, but negatively associated with greater shrub cover. Their probability of localized colonization was negatively associated with greater shrub cover. Localized extinction probabilities for Sanibel Island rice rats were positively associated with increased rainfall totals in the preceding 3 months and greater shrub cover. Using aerial photography from across the Sanibel Island rice rat's range, we found 5.5-fold greater shrub cover in 2015 than in 1944. We suggest that increases in shrub cover and reduced cordgrass cover may be driving the decline of this once ubiquitous endemic species and that the encroachment of freshwater wetlands requires greater attention due to its potential to imperil wetland-dependent wildlife.