Free‐ranging livestock pose a threat to forest biodiversity, exerting a profound influence on the survival of several endangered species. The mountains of Southwest China represent a biodiversity hotspot enriched with pheasant species of global significance; however, the influence of free‐ranging livestock on the survival and population of forest pheasants remains unclear. We examined the impact of livestock on the habitat suitability of subalpine pheasants and the associated mechanism during the breeding season in Southwest China (forest with and without grazing) over 2 years (2018–2019). Artificial nest experiments monitored by infrared‐triggered cameras showed that the nest failure rate was 2.18 folds higher in livestock‐active areas, where livestock directly accounted for 26.09% of all nest predation events, compared with other areas. Small animal trapping and vegetation quadrat surveys showed a 46% lower abundance of ground invertebrates, a critical food resource for breeding pheasants and their chicks, in grazing areas than in grazing‐free areas. Thus, livestock grazing markedly reduces the habitat suitability of subalpine pheasants during the breeding season. These results highlight the impacts of grazing on endangered pheasant species and the underlying mechanisms, necessitating centralized livestock management in these protected areas from April to July, coupled with livelihood transformation initiatives.