The recent increase in liquid biofuel production has stemmed from a desire to reduce dependence on foreign oil, mitigate rising energy prices, promote rural economic development, and reduce greenhouse gas emissions. The growth of this industry has important implications for biodiversity, the effects of which depend largely on which biofuel feedstocks are being grown and the spatial extent and landscape pattern of land requirements for growing these feedstocks. Current biofuel production occurs largely on croplands that have long been in agricultural production. The additional land area required for future biofuels production can be met in part by reclaiming reserve or abandoned croplands and by extending cropping into lands formerly deemed marginal for agriculture. In the United States, many such marginal lands have been enrolled in the Conservation Reserve Program (CRP), providing important habitat for grassland species. The demand for corn ethanOl has changed agricultural commodity economics dramatically, already contributing to loss of CRP lands as contracts expire and lands are returned to agricultural production. Nevertheless, there are ways in which biofuels can be developed to enhance their coexistence with biodiversity. Landscape heterogeneity can be improved by interspersion of land uses, which is easier around facilities with smaller or more varied feedstock demands. The development of biofuel feedstocks that yield high net energy returns with minimal carbon debts or that do not require additional land for production, such as residues and wastes, should be encouraged. Competing land uses, including both biofuel production and biodiversity protection, should be subjected to comprehensive cost-benefit analysis, so that incentives can be directed where they will do the most good.