The Bay-capped Wren-Spinetail (Spartonoica maluroides, Furnariidae) is the most specialized and threatened bird inhabiting Spartina-dominated saltmarshes in southeastern South America. These marshes are being modified at an increasing rate, primarily by cattle grazing and fire, which make this spinetail highly vulnerable. To assess how land use affects the Bay-capped Wren-Spinetail, we estimated its density under different intensities of fire and cattle grazing, studied selection of nesting habitat and nest success, and experimented with nest predation to determine predation rates and types of predators. We found similar population densities, nest microhabitats, and rates of nest predation in marshes with a low intensity of or no grazing. In contrast, the species was absent from marshes with a high intensity of grazing and fire. Nest height was the best predictor of daily survival rates. Nest-predation experiments demonstrated that nest height affects predation intensity and predator type. Our results suggest that low-intensity grazing and burning during winter are compatible with the presence and reproduction of the Bay-capped Wren-Spinetail. Thus low-intensity cattle grazing is a viable alternative for the sustainable use of saltmarshes in southeastern South America.