Background: Patterns of rarity can be explained by reproductive rates, levels of endemism, and habitat specificity, and knowledge on these parameters is important to understand the levels of vulnerability of each species and toformulate conservation strategies. Here, we studied nest-site selection and breeding biology of the Atlantic Royal Flycatcher (Onychorhynchus swainsoni), a poorly known vulnerable bird endemic to the Brazilian Atlantic Forest. Methods: We addressed nest site selection in three different levels: first, we searched for nests near and far from water to investigate whether birds could select water proximities to construct nests; second, we examined if they could select certain streams in detriment of others, and we analyzed the characteristics of used and non-used streams, and third, in streams in which nests were found, we addressed nest site selectivity by comparing a number of parameters between nest sites and random sites. Further, we provide information on breeding biology parameters related to annual fecundity. Results: During five breeding seasons, we found 23 nests in a well-preserved forest continuum. All of the nests were constructed above water, and they were found in streams that were about 4 m in width, instead of smaller streams with about 1.5 m in width. Modeling analyses revealed that within the used streams, nests were constructed in sites with lower vegetation density in relation to random points, while stream width, water speed, and canopy cover presented no significant correlation. Atlantic Royal Flycatchers in our study had a 22-day incubation period and 24 to 27-day nestling period. Overall nest survival was comparatively high (62％), but clutch size was small (N = 2 eggs) and double-brooding was unlikely, which resulted in a low annual fecundity (1.4 ± 0.9 fledglings per reproductive female). Along the nesting streams, we found an average of 1.62 ± 0.07 breeding pairs/km. Conclusions: These data suggest that nesting habitat specificity and low annual fecundity are among the factors contributing to the rarity of the Atlantic Royal Flycatcher in large forest continuums and to its absence in fragmented environments. It reinforces the importance of large well-preserved forest continuums for the conservation of habitat specialist Atlantic Forest bird species.