Despite mounting evidence of mercury accumulation in terrestrial ecosystems, few data exist on how environmental mercury exposure affects reproductive success in free-living songbirds. From 2007 through 2010, we monitored reproductive success of Carolina Wrens (Thryothorus ludovicianus) breeding along the forest floodplain of two mercury-contaminated rivers in Virginia. Using an information-theoretic approach, we found a 34% reduction in nesting success of Carolina Wrens on mercury-contaminated sites when compared with reference sites. Blood mercury concentration of the attending female was a strong predictor of nest success. Birds nesting on contaminated sites were 3× more likely to abandon their nests than birds on uncontaminated reference sites. We report a range of effects concentrations associated with various levels of reproductive impairment; for example, a 10% reduction in nest success corresponded with 0.7 µg g^-1 mercury in the blood, 2.4 µg g^-1 mercury in body feathers, 3.0 µg g^-1 mercury in tail feathers, and 0.11 µg g^-1 mercury in eggs. This is the first field study to document the effect of specific adult songbird blood mercury concentrations on breeding performance; our results show that free-living songbirds can suffer negative reproductive effects at relatively low mercury concentrations.