Management of powerline corridors in Australia has traditionally focused on the complete removal of vegetation using short rotation times owing to the perceived hazard of fire associated with corridor vegetation. Because of the intense management associated with fire hazards, little thought has been given to use of powerline corridors by wildlife. This has resulted in corridors traditionally being viewed as a source of fragmentation and habitat loss within forested ecosystems. We investigated the responses of small mammal communities living in a powerline corridor to management-induced vegetation changes at different successional stages, to determine whether a compromise could be reached between managing corridors for fire and biodiversity. Habitat modelling in the corridor and adjacent forest for three native and one introduced small mammal species demonstrated that species responded to changes in vegetation structural complexity, rather than time-since-management per se. Early seral stages of vegetation recovery after corridor management encouraged the introduced house mouse (Mus domesticus) into corridors and contributed little to biodiversity. Mid-seral-stage vegetation, however, provided habitat for native species that were rare in adjacent forest habitats. As the structural complexity of the vegetation increased, the small mammal community became similar to that of the forest so that corridor vegetation contributed fewer biodiversity benefits while posing an unacceptable fire risk. If ecologically sensitive management regimes are implemented to encourage mid-seral vegetation and avoid complete vegetation removal, powerline corridors have the potential to improve biodiversity. This would maintain landscape connectivity and provide habitat for native species uncommon in the forest while still limiting fuel loads in the corridor.