Background. Ecosystem Engineers are species that transform habitats in ways that influence other species. While the impacts of many engineers have been well described, our understanding of how their impact varies along environmental gradients remains limited. Although disentangling the effects of gradients and engineers on biodiversity is complicated – the gradients themselves can be altered by engineers – doing so is necessary to advance conceptual and mathematical models of ecosystem engineering. We used leaf-cutter ants (Atta spp.) to investigate the relative influence of gradients and environmental engineers on the abundance and species richness of woody plants. Methods. We conducted our research in South America's Cerrado. With a survey of plant recruits along a canopy cover gradient, and data on environmental conditions that influence plant recruitment, we fit statistical models that addressed the following questions: (1) Does A. laevigata modify the gradient in canopy cover found in our Cerrado site? (2) Do environmental conditions that influence woody plant establishment in the Cerrado vary with canopy cover or proximity to A. laevigata nests? (3) Do A. laevigata and canopy cover act independently or in concert to influence recruit abundance and species richness? Results. We found that environmental conditions previously shown to influence plant establishment in the Cerrado varied in concert with canopy cover, but that ants are not modifying the cover gradient or cover over nests. However, ants are modifying other local environmental conditions, and the magnitude and spatial extent of these changes is consistent across the gradient. In contrast to prior studies, we found that ant-related factors (e.g., proximity to nests, ant changes in surface conditions), rather than canopy cover, had the strongest effect on the abundance of plant recruits. However, the diversity of plants was influenced by both the engineer and the canopy cover gradient. Discussion. Atta laevigata in the Cerrado modify local conditions in ways that have strong but spatially restricted consequences for plant communities. We hypothesize that ants indirectly reduce seedling establishment by clearing litter and reducing soil moisture, which leads to seed and seedling desiccation. Altering soil nutrients could also reduce juvenile growth and survivorship; if so these indirect negative effects of engineering could exacerbate their direct effects of harvesting plants. The effects of Atta appear restricted to nest mounds, but they could be long-lasting because mounds persist long after a colony has died or migrated. Our results support the hypothesis that leaf-cutter ants play a dominant role in Cerrado plant demography. We suggest the ecological and economic footprint of these engineers may increase dramatically in coming decades due to the transformation of the Cerrado by human activities.