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Summary Shrub encroachment due to heavy grazing has led to dramatic changes in arid savanna landscape structure worldwide. It is considered to be one of the most threatening forms of rangeland degradation altering plant diversity. However, possible impacts of shrub encroachment on species diversity at higher trophic levels remain poorly understood. Additionally, indirect effects, such as changes of trophic interactions, are often ignored when trying to understand changes in biodiversity patterns. In this study, conducted in the southern Kalahari, we explored how the diversity of small carnivores and their prey is affected by shrub encroachment. We analysed the relationships between abundance and diversity of small carnivores, the availability of their main prey groups (coleopterans, termites, grasshoppers, rodents) and the structural diversity of the landscape (shrub, grass and herb cover). Eight hundred track surveys were conducted to determine carnivore abundance on 20 rangeland habitats, which represented a gradient of grazing intensity. Prey availability was surveyed for each study site and related to vegetation cover. Results show a significant impact of shrub cover on abundance and diversity of carnivores and their prey. The diversity of both, carnivores and their prey, showed a hump-shaped response to increasing shrub cover whereas relative carnivore abundance decreased. Availability of prey groups was affected differently by shrub cover increase. Diversity of carnivores was best predicted by shrub cover (R=0.7, p<0.001) indicating the overriding role of habitat structure as compared to prey availability. We conclude that intermediate shrub cover values enrich structural diversity of savanna landscape and in consequence sustain diversity of small carnivores and their prey in arid and semiarid ecosystems.