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Loss of heather Calluna vulgaris-dominated moorland in Britain has been associated with long-term declines in Red Grouse Lagopus lagopus scotica, a gamebird of economic importance. We tested whether restoring heather habitat on a grouse moor in southwest Scotland, where heather was previously in decline, improved Red Grouse density, productivity, and survival. We analyzed spatial and temporal relationships between Red Grouse demographic rates, estimated from counts, and habitat variables measured from ground and aerial vegetation surveys. Reductions in sheep Ovis aries grazing and other heather restoration measures (i.e. burning and cutting, and in some areas reseeding of heather following herbicide treatment to reduce grass dominance) increased total heather cover by 10% and the area of heather-dominated vegetation by 30% within six years. Prebreeding, and for aerial surveys also postbreeding, densities of Red Grouse were highest in areas with more heather cover (range: 0-92%), and prebreeding densities increased more where heather recovery was greatest. However, we found no relationship between heather cover and Red Grouse productivity or survival rates, the latter also when rates were estimated from radio-tagged individuals. Changes in heather cover were not associated with changes in postbreeding densities or survival of Red Grouse, although they were positively related to change in productivity for aerial surveys. Overall, management for Red Grouse had a larger effect on density and productivity than reductions in sheep grazing. This is the first study examining Red Grouse responses in relation to changes in heather cover within the same site, in contrast to previous between-moor comparisons, where other factors may have contributed to variation in Red Grouse demography. Our results suggest that, in the long term, heather restoration has the potential to increase Red Grouse carrying capacity, but realizing this potential first requires improving Red Grouse demographic rates.