1  MOSAIC, a spatially referenced Markov model was used to show how interactions among trees in a neighbourhood may influence the patch structure of forests. A series of two-species simulations were conducted with neighbourhood strength ranging from neutral (chances of species replacing each other independent of neighbourhood composition) to strong (chance of replacement for each species proportional to neighbourhood composition), and with neighbourhood sizes including 1–50 neighbours.2  Neighbourhood strength was positively correlated with the degree of patchiness. Very high neighbourhood strength is necessary to form mono-specific patches composed of hundreds of individual trees. Intermediate neighbourhood sizes (5–12 neighbours) led to the most distinct patches where individuals were arranged so that contact between species was minimized.3  Neighbourhood effects alone are unlikely to lead to large areas (several ha) dominated by one species. However, simulations showed that neighbourhood effects can augment small differences in the environment, resulting in large mono-specific patches.4  Simulations with 4 and 5 species indicated that groups of species can interact to form spatially distinct communities, starting from a random mixture on a uniform environment. This implies that neighbourhood effects may be responsible for some unexplained variability in studies that attempt to relate environmental parameters to forest composition.5  Patch structures that develop due to neighbourhood effects are usually not recognized by current vegetation classification schemes or by forest managers, and this lack of recognition could lead to the loss of certain natural spatial structures on forested landscapes.