Considering habitat selection at multiple scales is essential to fully understand habitat requirements and management needs for wildlife species of concern. We used a hierarchical information-theoretic approach and variance decomposition techniques to analyze habitat selection using local-scale habitat variables measured in the field and landscape-scale variables derived with a Geographic Information System (GIS) for nesting greater sage-grouse (Centrocercus urophasianus) in the Powder River Basin (PRB), Montana and Wyoming, USA, 2003–2007. We investigated relationships between habitat features that can and cannot be mapped in a GIS to provide insights into interpretation of landscape-scale–only GIS models. We produced models of habitat selection at both local and landscape scales and across scales, yet multiscale models had overwhelming statistical and biological support. Variance decomposition showed that local-scale measures explained the most pure variation (50%) in sage-grouse nesting-habitat selection. Landscape-scale features explained 20% of pure variation and shared 30% with local-scale features. Both local- and landscape-scale habitat features are important in sage-grouse nesting-habitat selection because each scale explained both pure and shared variation. Our landscape-scale model was accurate in predicting priority landscapes where sage-grouse nests would occur and is, therefore, useful in providing landscape context for management decisions. It accurately predicted locations of independent sage-grouse nests (validation R²  =  0.99) and showed good discriminatory ability with >90% of nests located within only 40% of the study area. Our landscape-scale model also accurately predicted independent lek locations. We estimated twice the amount of predicted nesting habitat within 3 km of leks compared to random locations in the PRB. Likewise we estimated 1.8 times more predicted nesting habitat within 10 km of leks compared to random locations. These results support predictions of the hotspot theory of lek placement. Local-scale habitat variables that cannot currently be mapped in a GIS strongly influence sage-grouse nest-site selection, but only within priority nesting habitats defined at the landscape scale. Our results indicate that habitat treatments for nesting sage-grouse applied in areas with an unsuitable landscape context are unlikely to achieve desired conservation results.