We assessed the influence of habitat characteristics on nest site selection and nest success of red grouse Lagopus lagopus scoticus in three populations on managed moorland in Scotland during 1998–1999. We measured habitat characteristics at the nests of 148 radio-tagged female grouse and compared them with similar measurements taken at fixed and random points within their home range. Red grouse nested in vegetation that was significantly taller and denser, and with greater canopy cover, than points adjacent to nests or to random points. They nested more in mature heather and less in grass-dominated vegetation than would be expected by chance. Red grouse nest success was high with 77% initial success rising to a minimum of 80% success once re-nesting had occurred. Nest success was weakly related to vegetation height in 1998, but no similar relationship was found in 1999. We suggest that the high nest success of red grouse and the relatively small influence of habitat characteristics on the outcome of nesting attempts is due to predator control on managed grouse moors in Scotland.