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In North America, the loss of habitat heterogeneity resulting from homogeneous livestock grazing is one factor contributing to steep population declines of many grassland bird species. Patch-burn grazing is a management technique that uses historic grassland disturbance as a model to create heterogeneous grassland composition and structure, providing for the diverse habitat requirements of grassland birds. Though this management technique has been used successfully in relatively extensive grasslands, its utility on smaller grassland patches is less clear. We examined the efficacy of patch-burn grazing to restore habitat heterogeneity and increase grassland bird diversity in relatively small pastures (15-32 ha) in a grassland landscape fragmented by cultivation and tree encroachment. In 2006, we established 12 experimental pastures in the Grand River Grasslands of southern Iowa and northern Missouri, with 4 pastures in each of three treatments: 1) patch-burn graze, with spatially discrete fires and free access by cattle (the fire-grazing interaction), 2) graze-and-burn, with free access by cattle and a single burn of the entire pasture every third year, and 3) burn-only, with a single burn of the entire pasture every third year and no grazing. Patch-burn grazing in the first phase of the project (2007-2009) did not generate habitat heterogeneity or significant differences in bird diversity. From 2010 to 2013, stocking rates were reduced to increase residual vegetation in unburned patches at the end of the grazing season to increase heterogeneity. Habitat heterogeneity in patch-burn graze pastures subsequently increased relative to other treatments. Concomitantly, diversity of obligate grassland birds also increased in patch-burn graze pastures and was greatest in 2012 and 2013. We conclude that the fire-grazing interaction can be used to restore habitat heterogeneity and increase grassland bird diversity, even in relatively small grassland patches embedded in a highly fragmented landscape. © 2016 The Society for Range Management. Published by Elsevier Inc. The Rangeland Ecology & Management archives are made available by the Society for Range Management and the University of Arizona Libraries. Contact lbry-journals@email.arizona.edu for further information.