We assessed the occupancy dynamics of 275 California Spotted Owl (Strix occidentalis occidentalis) territories in 4 study areas in the Sierra Nevada, California, USA, from 1993 to 2011. We used Landsat data to develop maps of canopy cover for each study area, which we then used to quantify annual territory-specific habitat covariates. We modeled the relationships between territory extinction and colonization using predictor variables of habitat, disturbance (logging, fire), climate, and elevation. We found that forests with medium (40–69%) and high (≥70%) canopy cover were the most important predictors of territory occupancy in all study areas, and that both canopy cover categories were positively correlated with occupancy. We used analysis of deviance to estimate the amount of variation explained by the habitat covariates (primarily medium and high canopy cover) and found that these covariates explained from 35% to 67% of the variation in occupancy. Climatic covariates were not correlated with occupancy dynamics and explained little of the variation in occupancy. We also conducted a post hoc analysis in which we partitioned canopy cover into 10% classes, because our original partitioning into 3 classes may have lacked sufficient resolution to identify canopy cover levels where occupancy changed abruptly. In this post hoc analysis, occupancy declined sharply when territories contained more area with <40% canopy cover, and the amount of 50–59% and 60–69% canopy cover had a more positive association with occupancy than did 40–49% canopy cover. Our results suggest that some fuels treatments intended to reduce fire risk and improve forest resilience could be located within Spotted Owl territories without adversely impacting territory occupancy if such treatments do not consistently reduce canopy cover below 50%. We suggest that future work quantify components of forest structure (e.g., large tree density, vertical complexity) known to be selected by owls and relate these characteristics to occupancy and fitness metrics.