Habitat choice often entails trade-offs between food availability and predation risk. Understanding the distribution of individuals in space thus requires that both habitat characteristics and predation risk are considered simultaneously. Here, we studied the nest box use of two arboreal squirrels who share preferred habitat with their main predators. Nocturnal Ural owls (Strix uralensis) decreased occurrence of night-active flying squirrels (Pteromys volans) and diurnal goshawks (Accipiter gentilis) that of day-active red squirrels (Sciurus vulgaris). Unexpectedly, the amount of preferred habitat had no effect on nest box use, but, surprisingly, both squirrel species seemed to benefit from close proximity to agricultural fields and red squirrels to urban areas. We found no evidence of trade-off between settling in a high-quality habitat and avoiding predators. However, the amount of poor-quality young pine forests was lower in occupied sites where goshawks were present, possibly indicating habitat specific predation on red squirrels. The results suggest that erecting nest boxes for Ural owls should be avoided in the vicinity of flying squirrel territories in order to conserve the near threatened flying squirrels. Our results also suggest that flying squirrels do not always need continuous old forests, and hence the currently insufficient conservation practices could be improved with reasonable increases in the areas left untouched around their nests. The results of this study demonstrate the importance of taking into account both habitat requirements and predation risk as well as their interactive effects when modeling the occupancy of threatened animal species and planning their conservation.