Context Grazing by domestic stock can potentially influence ecosystems positively or negatively, depending on the grazing regime and intensity. The pygmy bluetongue lizard (Tiliqua adelaidensis) is an endangered species, restricted to fragmented grasslands in the Mid North region of South Australia, predominantly grazed by sheep. These lizards refuge in vertical burrows. They do not dig their own burrows, instead relying on co-existing spiders for this essential resource. Aims We investigated how sheep grazing influenced spider burrows, and predicted the following: that grazing sheep might trample and destroy shallow burrows; that burrows in grazed habitat with less vegetative cover would have higher temperatures in summer; and that, by way of compensation, spiders would dig deeper burrows in grazed habitat. Methods We monitored 12 30m×30m plots monthly, over two austral spring/summer periods (September–March 2012–14). We recorded the number, depth and occupant of all spider burrows in those plots in each survey. We also measured temperatures inside artificial burrows in grazed and ungrazed habitat over a 3-day period in September 2014. Key results Mean burrow depth increased with grazing. This was not because individual burrows became deeper, but because the shallowest burrows were lost where there were sheep. Burrows were significantly hotter in grazed habitat, but lizards consistently chose deeper, cooler burrows. In the subset of burrows that were occupied by lizards, there was no difference in depth between grazed and ungrazed treatments. We detected no difference in spider digging activity between grazed and ungrazed plots. Conclusions Sheep grazing can destroy shallow burrows, probably through trampling, and because sheep produce burrow filling debris. However, grazing did not affect deeper burrows occupied by pygmy bluetongue lizards. Implications This short study indicated that moderate levels of grazing have low impact on deeper burrows suitable for pygmy bluetongue lizards and for lizard persistence. It explains how sheep and lizards have co-occurred for so long, but leaves open the question of how the loss of shallow burrows affects populations of the burrow-digging spiders that are an essential component of the lizard environment.