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1. Yellowhammers began to decline on British lowland farmland in the late 1980s and losses are presently 10% per year. This study examined variation in the habitat selection and breeding success of yellowhammers, allowing an evaluation of whether Britain's yellowhammer decline might have been caused by recent changes in agriculture. 2. Yellowhammer territories were associated with hedgerows, vegetated ditches and wide uncultivated grassy margins around fields. Pasture and silage leys were avoided. Nests were built among herbaceous vegetation in ditches or in the shrubby vegetation of hedgerows. 3. Breeding started slightly earlier on organic farms than on intensively managed farms, but no measure of breeding success differed between farm types. Predation was the cause of most (64%) nest failures. A maximum of three breeding attempts (two successful) was observed per pair, with a mean clutch size of 3·3, a Mayfield nest success rate of 0·46, and 2·6 nestlings fledged per successful brood. These data, together with published estimates of adult yellowhammer survival and of post-fledging survival among other passerines, suggest that breeding productivity is too low to maintain a stable population. 4. The removal of hedgerows or abandonment of hedge management, filling or clearing of ditches, intensification of grassland management and cropping or grazing right up to the field edge, are all likely to have adversely affected yellowhammers on lowland farmland in southern England. Policy reforms that redirect subsidy support to environmentally beneficial management of field margin habitats and retention of winter-feeding sites such as stubbles should assist in restoring populations of breeding yellowhammers on lowland farmland. 5. Our data expand further the array of farmland bird species for which interactions between agricultural change and population change are increasingly understood.