Summary1. Hole-nesting birds are frequently faced with a shortage of suitable nest sites in regions of intensive forest management. Nest boxes are sometimes provided to alleviate nest-site limitation in cavity-nesting waterfowl and are also recommended for several rare and endangered species. However, the impacts on effective breeding numbers and breeding success have rarely been considered, particularly in instances where density dependence might operate. 2. We experimentally manipulated nest sites to assess limits on the population size of a secondary cavity-nesting species, the common goldeneye Bucephala clangula, living on freshwater lakes. We also examined density dependence in their reproductive output. 3. Breeding pairs were counted in experimental and control areas over a 12-year period; for 4 years (1988-91) before nest box addition (1992-94 in the experimental area) and for 5 years (1995-99) afterwards. Broods were counted each year between 1988 and 1999 to study reproductive output. 4. Mean number of pairs per lake increased after the addition of nest boxes in the experimental area but not in the control area. However, neither the mean number of broods per lake nor the mean number of fledged birds per lake increased significantly in the experimental area. 5. When the whole period of 1988-99 was considered and data pooled from all the lakes, the numbers of broods and fledged birds showed negative density dependence of reproductive output. 6. Our results indicate that nest sites limit the population size of breeding common goldeneye, but show also that density-dependent factors operate to limit reproductive output. The possibility that density dependence may negate management actions directed at increasing breeding numbers in cavity-nesting waterfowl should be considered carefully before taking these actions. This also applies to nest box provisioning programmes aiming to manage populations of endangered species.