Bovine tuberculosis (TB) is a zoonotic disease that can have serious consequences for cattle farming and, potentially, for public health. In Britain, failure to control bovine TB has been linked to persistent infection of European badger (Meles meles) populations. However, culling of badgers in the vicinity of recent TB outbreaks in cattle has failed to reduce the overall incidence of cattle TB. Using data from a large-scale study conducted in 1998–2005, we show that badgers collected on such localized culls had elevated prevalence of Mycobacterium bovis, the causative agent of bovine TB, suggesting that infections in cattle and badgers were indeed associated. Moreover, there was a high degree of similarity in the M. bovis strain types isolated from cattle and associated badgers. This similarity between strain types appeared to be unaffected by time lags between the detection of infection in cattle and culling of badgers, or by the presence of purchased cattle that might have acquired infection elsewhere. However, localized culling appeared to prompt an increase in the prevalence of M. bovis infection in badgers, probably by disrupting ranging and territorial behavior and hence increasing intraspecific transmission rates. This elevated prevalence among badgers could offset the benefits, for cattle, of reduced badger densities and may help to explain the failure of localized culling to reduce cattle TB incidence.