The effects of fragmentation of the sub-humid low-boreal forest in agro environments on bryophyte and lichen diversity were analyzed on 44 woodlots in three regions of northern Alberta, Canada. Woodlots were selected to cover a wide variety of shapes and sizes in each area. Several microclimatic variables, which included temperature at three different heights above the forest floor, relative humidity, and the amount of light penetration were measured in five m diameter circular sample plots along transects that covered the length and the width of each fragment. The number of microhabitats that included living trees with creviced and smooth bark, standing dead, different decay classes of downed woody debris, soil and rock were tabulated at each sample plot. Bryophyte and lichen presence was noted for all microhabitats found within each plot. There was a trend of decreasing temperature and light intensity and increasing humidity up to 15 m from the edge of the fragments. A multiple regression analysis revealed that the distance from edge and the habitat heterogeneity were the most important variables affecting bryophyte and lichen species richness. Further analysis indicated that edge effects were significant for bryophytes, but not for lichens. The size and shape of fragments had a significant effect on habitat heterogeneity, and bryophyte and lichen diversity. Although there was a distinction between the floras in each region, the effects of fragment size and habitat heterogeneity were similar. An indicator species analysis selected several indicators of large, medium, and small fragments that were also indicators of habitat heterogeneity and species richness. The presence or absence of several indicator species is used to produce performance benchmarks for habitat heterogeneity and species richness. The use of indicator species offers an inexpensive and relatively easy method to evaluate edge effects and habitat heterogeneity on bryophyte and lichen diversity in woodlots.