The western subspecies of the Purple-crowned Fairy-wren (Malurus coronatus coronatus) is listed as vulnerable under Commonwealth and Northern Territory legislation. Declines in numbers are presumed to be due to loss and degradation of riparian habitats upon which it depends. In the Northern Territory portion of its range, the species nests, and mainly forages, in dense stands of tall River Grass (Chionachne cyathopoda). We examined the characteristics of River Grass-dominated habitats and wren group sizes, persistence and reproductive success at five sites in the Victoria River District (VRD), over a 3-year period (2000-2003). Sites spanned a range of cattle grazing intensity and history. River Grass height was greatest and frequency of bare ground the least at sites with the lowest grazing pressure. The persistence of adult fairy-wrens was greater in ungrazed than in grazed sites. In the second year of the study, high densities of cattle were (unexpectedly) introduced to one of the designated ungrazed sites (Coolibah), allowing for a before-after-control-impact study. After cattle introduction, at Coolibah mean group size of fairy-wrens declined (from 3.0 to 2.2) and year-to-year persistence of adults declined severely (from 89% to 24%), whereas on ungrazed sites, mean group size increased or remained constant and persistence of adults remained unchanged over the same period. This study demonstrates that grazing by cattle in the VRD riparian habitats detrimentally affects habitat quality and some population parameters for Purple-crowned Fairy-wrens. We suggest that these effects have potential long-term negative effects on the status of this vulnerable subspecies.