1. Fire is an intrinsic component of many natural ecosystems. In human-modified landscapes that occur in fire-driven ecosystems, it can be difficult to make fire management decisions, as there must be a trade-off between ideal conservation management and the practicalities of management in an altered landscape. 2. We assess how biodiversity is influenced by differences in fire regime in a landscape fragmented by timber production. Here, optimal fire management for maintaining grassland integrity is not always possible, due to logistical constraints and fire risk to plantations. We investigate thicket establishment arising from reduced fire frequency, and how this affects butterfly diversity, assemblage structure, indicator species and species associations to larval host plants with different growth forms. Butterflies were sampled along a gradient of woodiness in large-scale conservation corridors that separate timber compartments. 3. Percentage overall canopy cover was a key variable driving richness and assemblage structure. The two extreme stages along the successional gradient, recently burned grassland and natural forests, supported relatively diverse and complementary butterfly assemblages. Grassland corridors without fire for two years was as high in butterfly diversity, and similar in composition to recently-burned grasslands. However, corridors without fire for >5 years were encroached by thicket and supported lower butterfly diversity. Thicket, with its intermediate vegetation character, was poor habitat for species adapted to either open grassland or to forests. Also, thicket-encroached areas carry high fire risk to plantations. 4. Synthesis and application: We recommend a divergent management approach that aims for either extreme of the fire frequency continuum, depending on the stage of succession and management logistics for each site: (1) frequent burning to prevent bush encroachment in less-encroached, logistically easier sites, or (2) letting succession run its course through thicket to forest by excluding fire in heavily encroached, logistically challenging sites. Both options are practically feasible, and maintain biotopes that have high value for butterfly conservation and low fire risk to plantations. This divergent management is a flexible strategy for the benefit of both conservation and commercial interests across fire-prone plantation mosaics.