Natural nest-site selection was investigated in 50 radiocollared southern flying squirrels Glaucomys volans during spring and summer, 1994–1996, in the Ouachita National Forest of Arkansas. Squirrels nested in 226 trees in a variety of habitats at five study areas. Contrary to previous reports describing southern flying squirrels as habitat generalists, in this study squirrels showed selection in both the habitat and tree type in which nests were placed. Where it was available, mature pine–hardwood forest was selected for nesting. Young (< 15 years old) and immature (15–40 years old) pine plantations and harvested areas were avoided as nesting habitats. At harvested study areas, squirrels nested in protected riparian mature forest strips (greenbelt) along, and 10–20 m either side of, intermittent creeks and in adjacent mature forests. Squirrels constructed only outside nests in pine trees. In mature pine–hardwood forest, pines were used for outside nests more frequently than hardwoods; in greenbelt habitat, pines and hardwoods were chosen equally for outside nests. Both outside and cavity nests were found in hardwoods; standing dead trees (snags) contained only cavity nests. Snags were selected over hardwoods for cavity nesting in both mature pine–hardwood forest and greenbelt habitat. All hardwood species and all decay classes of snags were used for diurnal nesting in greater frequency than expected. Considering both cavity and outside nest-site selection, pines were used less than expected. Results suggest that mature forests are optimal flying squirrel nesting habitats and should be retained adjacent to harvested areas to provide resources to squirrels abandoning stands after disturbance. Within harvested areas, nesting habitat can be substantially improved through the retention of overstory hardwoods and snags, as well as protection of mature forest strips along drainages.