The study of habitat selection has long been influenced by the ideal free model, which maintains that young adults settle in habitat according to its inherent quality and the density of conspecifics within it. The model has gained support in recent years from the finding that conspecifics produce cues inadvertently that help prebreeders locate good habitat. Yet abundant evidence shows that animals often fail to occupy habitats that ecologists have identified as those of highest quality, leading to the conclusion that young animals settle on breeding spaces by means not widely understood. Here, we report that a phenomenon virtually unknown in nature, natal habitat preference induction (NHPI), is a strong predictor of territory settlement in both male and female common loons (Gavia immer). NHPI causes young animals to settle on natal-like breeding spaces, but not necessarily those that maximize reproductive success. If widespread, NHPI might explain apparently maladaptive habitat settlement.