The persistence of many cavity‐nesting animals is threatened by habitat modification and a shortage of suitable breeding sites. Consequently, provision of alternative breeding sites is a frequently applied short‐ to medium‐term conservation action. However, the effectiveness of provisioning for breeding success and persistence of breeding animals is rarely considered and could lead populations into an ecological trap. We evaluated the effectiveness of providing nest boxes for little penguins (Eudyptula minor) compared with natural nests over 25 years. We assessed nest‐box adoption and occupancy rates, compared breeding success (i.e., hatching and fledging success) and indices of productivity (i.e., observed brood size, total fledged chick mass, and the number of clutch initiations) with nest survival models and log‐linear mixed effects models, and compared long‐term residency patterns with Link–Barker mark‐recapture models between artificial and natural nests. Little penguins readily adopted nest boxes and breeding attempts were recorded in about 92% of nest boxes installed for 7 or more years. Breeding productivity from 6,081 monitored clutches varied by year and was similar across nest types in most years, but in poor breeding seasons nest boxes performed better. Survival rates to hatching and fledging averaged 7.6% and 8.6% greater in nest boxes, respectively. Similarly, the average total observed mass of chicks produced per clutch was 11% heavier in nest boxes. Annual site fidelity of 2,331 breeding penguins was similar in areas with nest boxes and areas with natural burrows, despite an average of 35% of natural burrows collapsing each year. Nest‐box provisioning for little penguins overcomes local nest‐site limitation, improves breeding success, and can result in local population increases, so is not indicative of an ecological trap. However, a self‐sustaining local population in the long term will require management strategies that address the underlying processes inhibiting population recovery and assist the transition from artificial nest sites back to natural nest sites. © 2014 The Wildlife Society.