Habitat characteristics such as resource availability and interspecific competition may have profound consequences for the reproductive success of territorial animals. As anthropogenic activities shift species distributions, resident specialist species may experience increased interspecific conflict with expanding generalist species. While this has been hypothesised to lead to reduced reproductive success for resident specialists in areas rich in common resources, few empirical examples of such scenarios have been demonstrated. We investigate the effects of habitat on reproductive success in the Fennoscandian Arctic fox (Vulpes lagopus), a tundra specialist that faces increased competition and intraguild predation from the expanding red fox (Vulpes vulpes). By pairing geospatial information with long-term Arctic fox den surveys from two Swedish populations and trapping indices of the Norwegian lemming (Lemmus lemmus), a common prey of the two fox species, we model spatiotemporal patterns of Arctic fox reproductive success. We find reduced Arctic fox reproductive success in dens located close to the boreal forest at all levels of prey availability in both populations, suggesting reduced reproductive success in the vicinity of red fox territories. Arctic fox reproductive success was higher in dens located in lemming-rich areas during the peak phase of the rodent cycle in one of the studied populations, but not in the low and increase phases. We propose that high-quality habitats may have a proportionally greater effect on Fennoscandian Arctic fox reproductive success at high prey availability, because interspecific conflict can be expected to be lower when common resources are more abundant. Under climate change-induced habitat loss and increased presence of boreal species in mountain tundra, managed refugia may be crucial for the conservation of species inhabiting the fringes of available habitat.