Nest-building is a costly activity and natural selection may sometimes favour usurpation of existing nests. Few quantitative studies have investigated the effect of usurpation of nests on the reproductive success of the usurped species. Here we studied 27 instances of usurpation of Grey-crowned Babbler (Pomatostomus temporalis) nests (n?310 nests) by Blue-faced Honeyeaters (Entomyzon cyanotis) in the monsoon tropics of Australia between 2003 and 2008. When usurpation occurred during laying or incubation the Babbler eggs disappeared. The frequency of nest usurpation by Blue-faced Honeyeaters varied between Babbler territories, from no usurpation to almost every year during the study period. Based on video-recording at Babblers' nests over 854 days, we observed 75 interference events on 39 days at 29 nests. Interference occurred most frequently during nest-building and incubation and much less frequently in the nestling stage. Modelling suggested interference by Honeyeaters can have severe effects on breeding of Grey-crowned Babblers, with success of individual nests reduced by 52.5% during the nest-building stage, 25.9% during incubation, and 1.2% during the nestling stage. Babbler group size did not affect the occurrence of interference. The southern subspecies of Grey-crowned Babbler is declining and it is conceivable that populations could be adversely affected by interference from Blue-faced Honeyeaters in areas where the two species co-occur.