The Hazel Grouse (Bonasa bonasia) has suffered from habitat loss due to changes in forestry practices in many regions of Europe. The widespread conversion of structurally heterogeneous to uniform, single-layered stands has caused many of its populations to decline. The trend in multi-functional forestry towards more dynamic processes and natural rejuvenation offers a unique opportunity to restore many habitats of Hazel Grouse in core areas of its actual distribution. As the Alps represent a stronghold of Hazel Grouse distribution in Central Europe, we aimed to determine the species-habitat relationship in mountain forests. We assessed the distribution and characteristics of Hazel Grouse habitat in a forest reserve of the Swiss Alps. Abiotic, structural and vegetation characteristics were investigated at the small scale, and abiotic and forest inventory data at the large scale. We compared the habitat characteristics of used and unused forest stands with a raster system consisting of bird presence and absence cells by applying a logistic regression. Hazel Grouse preferred stands with high proportions of tall rowans, forest edges, and a dense shrub layer at the small scale. Rowans had the strongest influence on Hazel Grouse occurrence. At the large scale, Hazel Grouse preferred forests with large proportions of alder and a diverse mosaic of canopy closure and stand structure. For 44% of the study area, the large-scale model predicted a probability of Hazel Grouse occurrence of more than 0.5. Our data supports the recommendation that the availability of suitable habitat for Hazel Grouse can be increased by natural reforestation of tree-fall gaps and stands with bark beetle infestation, as well as by enhancing the proportion of old-growth stands. Both measures will augment the shrub cover and number of rowan trees, two essential habitat and food resources for Hazel Grouse in mountain forests.