Australia has had the highest rate of mammal extinctions in the past two centuries when compared to other continents. Frequently cited threats include habitat loss and fragmentation, changed fire regimes and the impact of introduced predators, namely the red fox (Vulpes vulpes) and the feral cat (Felis catus). Recent studies suggest that Australia's top predator, the dingo (Canis dingo), may have a suppressive effect on fox populations but not on cat populations. The landscape of fear hypothesis proposes that habitat used by prey species comprises high to low risk patches for foraging as determined by the presence and ubiquity of predators within the ecosystem. This results in a landscape of risky versus safe areas for prey species. We investigated the influence of habitat and its interaction with predatory mammals on the occupancy of medium‐sized mammals with a focus on threatened macropodid marsupials (the long‐nosed potoroo [Potorous tridactylous] and red‐legged pademelon [Thylogale stigmatica]). We assumed that differential use of habitats would reflect trade‐offs between food and safety. We predicted that medium‐sized mammals would prefer habitats for foraging that reduce the risk of predation but that predators would have a positive relationship with medium‐sized mammals. We variously used data from 298 camera trap sites across nine conservation reserves in subtropical Australia. Both dingoes and feral cats were broadly distributed, whilst the red fox was rare. Long‐nosed potoroos had a strong positive association with dense ground cover, consistent with using habitat complexity to escape predation. Red‐legged pademelons showed a preference for open ground cover, consistent with a reliance on rapid bounding to escape predation. Dingoes preferred areas of open ground cover whereas feral cats showed no specific habitat preference. Dingoes were positively associated with long‐nosed potoroos whilst feral cats were positively associated with red‐legged pademelons. Our study highlights the importance of habitat structure to these threatened mammals and also the need for more detailed study of their interactions with their predators.