We describe microhabitat use and response to disturbance by the eastern pygmy-possum (Cercartetus nanus) in heathy dry sclerophyll forest using spool-and-line-tracking. We compared unlogged forest with forest regenerating four years after selective logging. Structural and floristic attributes were scored along spool lines and compared with a random line for each possum. We found that possums (n = 23) selected areas based on both structural and floristic attributes. Possums selected dense understorey, especially that comprising flowering hairpin banksia (Banksia spinulosa) and Gymea lily (Doryanthes excelsa). Fallen logs were not selected by nocturnally active possums. Spool lines in regrowth forest had less eucalypt cover and more understorey cover (e.g. D. excelsa and B. spinulosa) than unlogged forest. Conversely, cover of Banksia serrata was less in regrowth than unlogged forest. Spool lines were commonly found both at ground level (mean = 52–57% of lengths) and above the ground (43–48% of lengths). There was no difference in the mean spool height between the logging treatments (regrowth: 0.47 ± 0.14 m; unlogged: 0.49 ± 0.10 m; ± s.e.). Overall, our results suggest that the dense, flowering understorey that regenerates after selective logging is suitable for use and is the primary attribute selected by active pygmy-possums.