The global trend toward more intensive forms of agriculture is changing the nature of matrix habitat in agricultural areas. Removal of components of matrix habitat can affect native biota at the paddock and the landscape scale, particularly where intensification occurs over large areas. We identify the loss of paddock trees due to the proliferation of centre pivot irrigation in dryland farming areas as a potentially serious threat to the remnant biota of these areas. We used a region of south-eastern Australia as a case study to quantify land use change from grazing and dryland cropping to centre pivot irrigation over a 23-year period. We also estimated rates of paddock tree loss in 5 representative landscapes within the region over the same period. The total area affected by centre pivots increased from 0 ha in 1980 to nearly 9000 ha by 2005. Pivots were more likely to be established in areas which had originally been plains savannah and woodlands containing buloke (Allocasuarina luehmannii), a food source for an endangered bird. On average, 42% of paddock buloke trees present in 1982 were lost by 2005. In the two landscapes containing several centre pivots, the loss was 54% and 70%. This accelerated loss of important components of matrix habitat is likely to result in species declines and local extinctions. We recommend that measures to alleviate the likely negative impacts of matrix habitat loss on native biota be considered as part of regional planning strategies.