Habitat loss, fragmentation and degradation impacts are the most direct threat to global biodiversity. In this Primer, we discuss how these three forms of habitat transformation are inextricably intertwined, and how their effects on biodiversity and ecosystems are often context-specific. We draw on recent analyses that have explored this context-dependence directly, to discuss how local-scale impacts of habitat transformation are mediated by biogeographic-scale variation in evolutionary histories and species’ geographic ranges. We also discuss how changes to ecosystem functions and services in modified habitats can be just as context-dependent – and how these changes are further obscured by high levels of ecological redundancy in species functions, which can confer resilience to habitat transformation. To avoid the impending extinction of millions of species, it is crucial that the impacts of habitat transformation are mitigated through a combination of preventing further habitat loss while simultaneously extending and repairing the habitats that remain.