Habitat use and separation between 2 sympatric species, the giant panda (Ailuropoda melanoleuca) and the red panda (Ailurus fulgens), were studied in Yele Natural Reserve, Mianning County of Sichuan Province, China, to elucidate the coexistence of these specialized carnivores. Nineteen variables describing proximate habitat structure were measured at each fecal-group site. We tested if habitat structure differed between pandas and examined habitat separation between the species. Habitats used by each species differed significantly. The 2 pandas exhibited different patterns in microhabitat use, although their habitats overlapped in the study area. The giant panda occurred at sites on gentle slopes with lower density of fallen logs, shrubs, and bamboo culms. Sites also were close to trees and far from fallen logs, shrubs, and tree stumps. The red panda occurred at sites on steeper slopes with higher density of fallen logs, shrubs, and bamboo culms. Sites also were close to fallen logs, shrubs, and tree stumps. We conclude that microhabitat separation contributes to coexistence of giant and red pandas in areas of sympatry.