Two contrasting strategies have been proposed for conserving biological diversity while meeting the increasing demand for agricultural products: land sparing and land sharing production systems. Land sparing involves increasing yield to reduce the amount of land needed for agriculture, whereas land-sharing agricultural practices incorporate elements of native ecosystems into the production system itself. Although the conservation value of these systems has been extensively debated, empirical studies are lacking. We compared bird communities in shade coffee, a widely practiced land-sharing system in which shade trees are maintained within the coffee plantation, with bird communities in a novel, small-scale, land-sparing coffee-production system (integrated open canopy or IOC coffee) in which farmers obtain higher yields under little or no shade while conserving an area of forest equal to the area under cultivation. Species richness and diversity of forest-dependent birds were higher in the IOC coffee farms than in the shade coffee farms, and community composition was more similar between IOC coffee and primary forest than between shade coffee and primary forest. Our study represents the first empirical comparison of well-defined land sparing and land sharing production systems. Because IOC coffee farms can be established by allowing forest to regenerate on degraded land, widespread adoption of this system could lead to substantial increases in forest cover and carbon sequestration without compromising agricultural yield or threatening the livelihoods of traditional small farmers. However, we studied small farms (<5 ha); thus, our results may not generalize to large-scale land-sharing systems. Furthermore, rather than concluding that land sparing is generally superior to land sharing, we suggest that the optimal approach depends on the crop, local climate, and existing land-use patterns.