The highly urbanized San Francisco Bay Estuary, California, USA, is currently undergoing large-scale habitat restoration, and several thousand hectares of former salt evaporation ponds are being converted to tidal marsh. To identify potential effects of this habitat restoration on breeding waterbirds, habitat selection of radiotagged Forster's Terns (Sterna forsteri) was examined at multiple spatial scales during the pre-breeding and breeding seasons of 2005 and 2006. At each spatial scale, habitat selection ratios were calculated by season, year, and sex. Forster's Terns selected salt pond habitats at most spatial scales and demonstrated the importance of salt ponds for foraging and roosting. Salinity influenced the types of salt pond habitats that were selected. Specifically, Forster's Terns strongly selected lower salinity salt ponds (0.5–30 g/L) and generally avoided higher salinity salt ponds (≥ 31 g/L). Forster's Terns typically used tidal marsh and managed marsh habitats in proportion to their availability, avoided upland and tidal flat habitats, and strongly avoided open bay habitats. Salt ponds provide important habitat for breeding waterbirds, and restoration efforts to convert former salt ponds to tidal marsh may reduce the availability of preferred breeding and foraging areas.