Species in the family Psittacidae may be particularly vulnerable to anthropogenic habitat transformations that reduce availability of suitable breeding sites at different spatial scales. In southern Chile, loss of native forest cover due to agricultural conversion may impact populations of Slender‐billed Parakeets (Enicognathus leptorhynchus), endemic secondary cavity‐nesting psittacids. Our objective was to assess nest‐site selection by Slender‐billed Parakeets in an agricultural‐forest mosaic of southern Chile at two spatial scales: nest trees and the habitat surrounding those trees. During the 2008–2009 breeding seasons, we identified nest sites (N= 31) by observing parakeet behavior and using information provided by local residents. Most (29/31) nests were in mature Nothofagus obliqua trees. By comparing trees used for nesting with randomly selected, unused trees, we found that the probability of a tree being selected as a nest site was positively related to the number of cavity entrances, less dead crown, and more basal injuries (e.g., fire scars). At the nesting‐habitat scale, nest site selection was positively associated with the extent of basal injuries and number of cavity entrances in trees within 50 m of nest trees. These variables are likely important because they allow nesting parakeets to minimize cavity search times in potential nesting areas, thereby reducing energetic demands and potential exposure to predators. Slender‐billed Parakeets may thus use a hierarchical process to select nest sites; after a habitat patch is chosen, parakeets may then inspect individual trees in search of a suitable nest site. Effective strategies to ensure persistence of Slender‐billed Parakeets in agricultural‐forest mosaics should include preservation of both individual and groups of scattered mature trees.