Biotic assemblages of insular habitats are nested when poor assemblages are subsets of richer ones. Nestedness of species assemblages is frequent and may result from selective extinction or frequent colonization in insular habitats. It may also be created by a nested distribution of habitats among islands or by sampling bias. We sampled 67 isolated peatlands (7–843 ha) in southern Quebec, Canada, to measure nestedness of bird species assemblages among peatlands and assess the habitat nestedness hypothesis. Species and microhabitat assemblages were both strongly nested among peatlands. Whether sites were ranked by species richness, microhabitat richness or peatland area had no effect on nestedness. However, microhabitat nestedness was significantly reduced when sites were sorted by area rather than by microhabitat richness. As expected, if bird-microhabitat associations are responsible for the nested pattern of distribution, we found a positive correlation between the contributions of bird species and microhabitats to individual site nestedness. Nevertheless, microhabitat assemblages were significantly less nested than bird species assemblages, possibly because of frequent recolonization by birds or uneven sampling among sites.