Loss of fish habitat in North America has occurred at an unprecedented rate through the last century. In response, the Canadian Parliament enacted the habitat provisions of the Fisheries Act. Under these provisions, a "harmful alteration, disruption, or destruction to fish habitat" (HADD) cannot occur unless authorised by Fisheries and Oceans Canada (DFO), with legally binding compensatory habitat to offset the HADD. The guiding principle to DFO's conservation goal is "no net loss of the productive capacity of fish habitats" (NNL). However, performance in achieving NNL has never been evaluated on a national scale. We investigated 52 habitat compensation projects across Canada to determine compliance with physical, biological, and chemical requirements of Section 35(2) Fisheries Act authorisations. Biological requirements had the lowest compliance (58%) and chemical requirements the highest (100%). Compliance with biological requirements differed among habitat categories and was poorest (19% compliance) in riparian habitats. Approximately 86% of authorisations had larger HADD and/or smaller compensation areas than authorised. The largest noncompliance in terms of habitat area occurred in riverine habitat in which HADDs were, on average, 343% larger than initially authorised. In total, 67% of compensation projects resulted in net losses of habitat area, 2% resulted in no net loss, and 31% achieved a net gain in habitat area. Interestingly, probable violations of the Fisheries Act were prevalent at half of the projects. Analyses indicated that the frequency of probable Fisheries Act violations differed among provinces. Habitat compensation to achieve NNL, as currently implemented in Canada, is at best only slowing the rate of habitat loss. In all likelihood, increasing the amount of authorised compensatory habitat in the absence of institutional changes will not reverse this trend. Improvements in monitoring and enforcement are necessary to move towards achieving Canada's conservation goals.