Understanding selection of breeding habitat is critical to conserving and restoring habitats for the Greater Sage-Grouse (Centrocercus urophasianus), particularly in xeric landscapes (≤25 cm annual precipitation). We monitored radio-marked female sage-grouse in south-central Wyoming in 2008 and 2009 to assess microhabitat use during nesting and brood rearing. For each model we grouped variables into three hypothesis sets on the basis of the weight of support from previous research (a priori information). We used binary logistic regression to compare habitat used by grouse to that at random locations and used an information-theoretic approach to identify the best-supported models. Selection of microhabitat for nests was more positively correlated with mountain big sagebrush (Artemisia tridentata vaseyana) than with Wyoming big sagebrush (A. t. wyomingensis) and negatively correlated with cheatgrass. Nesting hens also selected microhabitats with greater litter cover. Microhabitat for brood-rearing had more perennial grass and sagebrush cover than did random locations. Microhabitat variables most supported in the literature, such as forb cover and perennial grass cover, accounted for only 8% and 16% of the pure variation in our models for early and late brood rearing, respectively. Our findings suggest sage-grouse inhabiting xeric sagebrush habitats rely on sagebrush cover and grass structure for nesting as well as brood-rearing and that at the microhabitat scale these structural characteristics may be more important than forb availability. Therefore, in xeric sagebrush, practices designed to increase forb production by markedly reducing sagebrush cover, as a means to increase sage-grouse productivity, may not be justified.