Shrub encroachment as a result of heavy grazing is assumed to affect species diversity negatively. However, shrubs may be important for animals because they provide shelter and nesting sites. In this study we analyzed the importance of shrubs as habitat structures at 3 spatial scales for yellow mongooses (Cynictis penicillata) in southern Kalahari rangelands. At burrow location we assumed shrubs reduce predation risk for occupants of burrows under shrubs and that shrubs protect burrows from trampling by larger herbivores. To investigate this, at microhabitat scale, we recorded the location of 24 reproductive and 112 sheltering burrows. However, in shrub-encroached areas prey availability is low. We surveyed vegetation cover and the spatial distribution of shrubs at mesoscale (1 ha) and compared it to random surveys. Group size and reproductive success were determined for 18 groups and related to shrub cover at territory scale (macroscale, 250 ha). Our results show that yellow mongooses prefer reproductive burrows under large Acacia shrubs if the distance to the next shrub was greater than 10 m. At mesoscale, areas with lower vegetation cover were favored. Shrub encroachment at territory scale (macroscale) affected group size negatively. A range of shrub cover between 15% and 17.5% indicates a critical upper threshold limiting reproduction. For yellow mongooses territory selection represents a trade-off between abundance of suitable shrubs for burrows (protection service) and the proportion of shrub cover at large spatial scales (reduced prey availability).