Nest boxes erected on 75 small lakes near Sudbury, Canada were monitored annually between 1987 and 1996 to measure the response of cavity-nesting waterfowl to changing chemical and biological conditions of their nesting habitat from the effects of acidification. Nest boxes were used mainly by common goldeneyes Bucephala clangula and hooded mergansers Lophodytes cucullatus, although a few were occupied by common mergansers Mergus merganser and wood ducks Aix sponsa. Use by hooded mergansers and wood ducks increased from 1987 to 1996, while use by goldeneyes remained stable. Patterns in nest box use reflected general population trends observed in the area. Interspecific nest parasitism also increased to 33% of all nests in 1996, probably a consequence of more hooded merganser nests. Clutch size, nesting and hatching success of goldeneye and hooded merganser eggs were similar to values reported for conspecifics in other studies. Overall, interspecific nest parasitism did not appear to affect the nesting success of either species. Although goldeneyes nested more often on fishless lakes early in the study, overall, fish presence, pH-value, lake area and connectivity were not related to nesting attempts or measures of nesting success for either species. Therefore, it is believed that for common goldeneyes and hooded mergansers currently breeding in the acid-stressed Sudbury area, habitat characteristics have little influence on nest site selection, particularly when compared to their documented effects on brood-rearing. However, monitoring of nest boxes may prove a less expensive method than aerial surveys to track population responses of cavity-nesting species to chemical improvements.