Inappropriate livestock grazing is implicated in the decline of vertebrate fauna species globally. Faunal responses to grazing can interact with the vegetation community in which they occur. We measured the response of an arboreal marsupial, the common brushtail possum (Trichosurus vulpecula vulpecula) to different cattle grazing strategies and vegetation types, and examined whether micro-habitat selection is driving this response. We hypothesised that where arboreal habitat is intact, brushtail possums would be resistant to the impacts of heavy grazing. We conducted a mark-recapture survey among four grazing treatments and in two vegetation types (Box and Ironbark), at a 20-year grazing trial in northern Australia. We found that brushtail possums were resistant to the impact of heavy grazing in both vegetation types, but preferred the heavy grazing treatment in the Box vegetation type. Complex arboreal habitat and low ground cover was preferred, and high grass cover and low tree species richness avoided. Most individuals exclusively used one vegetation type, with few using both, suggesting a 'matrix' vegetation between the Box and Ironbark may be creating a movement barrier. Vegetation type should provide a context for determining the benefits to arboreal wildlife of adopting a particular grazing management strategy.