The Lake Tahoe basin presents a unique challenge in the conservation of biological diversity.  The beloved lake basin is subject to high recreation use with its incumbent pollution and disturbance.  Although land development has been heavily regulated, economic pressure to expand its footprint are significant.  Adding to the challenge is the fragile nature of the basin’s biological diversity; the basin is located at the nexus of major zoogeographic regions such that many species are at the edge of their geographic range in the basin.  This unique amalgamation of features creates a challenging environment in which to conserve and restore biological diversity.  Public lands of over half a dozen agencies occupy over 80% of the basin, including thousands of parcels nestled in urbanizing areas. These urban forest parcels were acquired primarily for the purposes of sediment and nutrient retention to protect Lake Tahoe; however, they are also likely to play an important role in maintaining a sufficient amount and connectivity of habitat for many species at the lower elevations where the majority of development exists in the basin.  We present the results of a study of patterns of biological diversity in native forests along a gradient of urbanization in the basin.  We sampled 72-124 sites ranging from 0-70% developed and evaluated the individual and combined effects of land development and human activity on measures of biological diversity for vertebrates, invertebrates, and plants.  All taxonomic groups exhibited a reduction in biological diversity at higher levels of development and many appeared to be sensitive to human activity.  Nonetheless, it was also clear that remnant forest in these urbanizing areas play an important role in maintaining biological diversity in the local landscape.  Our results suggest how remnant forest in urban areas may be managed to enhance biological diversity and retain key ecosystem services.