In the Lake Tahoe Basin, the retention of native ecosystems within urban areas may greatly enhance the landscape’s ability to maintain biotic diversity. Our study of plant, invertebrate and vertebrate species showed that many native species were present in remnant forest stands in developed areas; however, their richness and abundance declined in association with increasing development across all taxonomic groups. Species richness for land birds and mammalian carnivores declined with development, whereas ant richness and small mammal abundance peaked at intermediate levels of development. Vegetation structure simplified with increasing development and the exotic plant species increased. The results of this study, the first to consider the effects of urbanization and remnant forests on biotic diversity in the Lake Tahoe Basin, can be used to guide land-use planning in order to maintain and enhance biodiversity in the face of increasing urbanization.