Nest-habitat selection in colonial species has rarely been assessed at multiple spatial scales to evaluate its fitness consequences. Management for the federally endangered U.S. Interior population of Least Terns (Sternula antillarum) has focused on maintenance of breeding habitats, including mechanical construction of sandbars from dredged material. Least Terns are attracted to large areas of unvegetated substrate, yet small-scale habitat features are thought to trigger selection for nesting. We evaluated nest-scale habitat selection to determine (1) whether selection differs between constructed and natural sandbars and (2) the subsequent consequences of habitat selection on nest success. During 2006–2008, we examined 869 Least Tern nest sites on constructed and natural sandbars in the Missouri River for evidence of microhabitat selection at the nest in relation to habitat within the surrounding 3-m area. Least Tern nest sites had coarser and larger substrate materials at the nest, more debris, and less vegetation than the surrounding area. Nests in constructed habitats had a greater percentage of coarse substrates and less vegetation or debris than nests in naturally created habitats. Apparent nest success was 1.8× greater on constructed than on natural sandbars. Nest success was best predicted by models with two spatial scales of predictors, including substrates (nest) and vegetation and debris (nest or surrounding area). Our results indicate that Least Terns select nest microhabitat characteristics that are associated with wind- and water-scoured habitats, and that nest success increases when these habitats are selected.