The dilution effect in the zoonotic disease transmission cycle theorizes that an increased diversity of host species will alter transmission dynamics, result in a decrease in pathogen prevalence, and potentially lower human disease incidence. The interrelationship of Borrelia burgdorferi (Johnson, Schmid, Hyde, Steigerwalt, and Brenner) (Spirochaetales: Spirochaetaceae), the etiological agent of Lyme disease (LD), and its primary vector, blacklegged ticks (Ixodes scapularis Say) (Acari: Ixodidae), is a commonly used example of the dilution effect, suggesting that an increased diversity of host species will be found in large, undisturbed forested tracts and lower diversity in fragmented forests. Given that Connecticut woodlands are mature with heavy upper canopies and generally poor habitat quality, we hypothesized there would be higher diversity of host species resulting in lower prevalence of B. burgdorferi in white-footed mice (Peromyscus leucopus Rafinesque) (Rodentia: Cricetidae) in forested residential areas. Using camera and live small mammal trapping techniques, we determined there was a greater richness of reservoir host species, significantly higher encounters with hosts, and significantly lower B. burgdorferi host-infection in residential areas as compared to large, intact forested stands. Furthermore, we determined that the driving factor of pathogen dilution was not host species diversity, but rather overall encounter abundance with alternative hosts, regardless of habitat type. Our study challenges major concepts of the dilution effect within the Connecticut landscape and calls for new managerial actions to address the current state of our woodlands and abundance of host species in the interest of both forest and public health.