The impacts of fragmentation are often overlooked in landscape studies investigating how habitat loss impacts biodiversity, despite the casual relationship linking both processes. As habitat loss is the primary cause of fragmentation, understanding the inter-related effects of these twin processes on biodiversity is key to minimise biodiversity loss. Here we assess how habitat amount and configuration influence insectivorous bat assemblages, considering both the direct effects of these processes, as well as the indirect effects of habitat amount mediated through configuration. Bats were acoustically surveyed along independent gradients of habitat amount (forest cover) and configuration (number of patches and edge density) across 28 insular landscapes embedded within a Malaysian hydroelectric reservoir. Using Structural Equation Modelling, the direct and indirect effects of habitat amount were examined on bat sonotype richness, total, and guild-specific activity (forest, edge and open-space foragers). Forest cover had a direct and positive effect on sonotype richness and forest forager activity. The quadratic relationship linking edge density and forest cover was strong and overall positive, but while below 30% of forest cover, increasingly forested landscapes had increasingly high edge densities, the opposite pattern was observed in more forested landscapes. On the other hand, increasingly forested landscapes consistently harboured less patches. Owing to the overall low habitat amount in our landscapes and negative edge effects, the indirect effects of forest cover (mediated through edge density) were therefore negative on sonotype richness, outweighing any positive direct effect. The number of patches had little effect on the bat assemblage, except on total activity which was higher in landscapes harbouring more forest patches. As a result, negative indirect effects of forest cover mediated through number of patches were only observed on total activity. Our results highlight that, in natural settings, habitat amount can hardly be altered without influencing habitat configuration, thereby preventing any independent management of these threats. Minimising habitat loss is therefore essential to balance the associated prevailing negative effects of fragmentation on insectivorous bats across tropical forests.