Habitat fragmentation/alteration has been proposed as a distinct process threatening the viability of populations of many organisms. One expression of its impact may be the disruption of core population processes such as inbreeding avoidance. Using the experimental design outlined in our companion paper, we report on the impact of habitat alteration (deforestation) on inbreeding in the rock-dwelling Australian lizard Egernia cunninghami. Ten microsatellite loci were used to calculate relatedness coefficients of potential and actual breeding pairs, and to examine mate-choice and heterozygosity. Despite significantly less dispersal and higher within-group relatedness between potential mates in deforested than in natural habitats, this did not result in significantly more inbred matings. Average relatedness amongst breeding pairs was low, with no significant difference between natural and fragmented populations in relatedness between breeding pairs, or individual heterozygosity. Active avoidance of close kin as mates was indicated by the substantially and significantly lower relatedness in actual breeding pairs than potential ones. These facts, and heterozygote excesses in all groups of immature lizards from both habitats, show that E. cunninghami maintained outbreeding in the face of increased accumulation of relatives.