The application of stable-hydrogen isotope (δD) measurements to the study of animal movement, resource use and physiology depends on understanding factors driving variation in δD in animal tissues. The source of micro-scale variation in δD is poorly known, yet understanding micro-scale patterns of δD could shed light on important ecological processes and improve our abilities to track animal movements. Using linear and additive models, we explored the influence of micro-scale habitat use, moisture and diet on tissue δD values of Nicaraguan cloud-forest birds. Using mist nets, we captured 211 individuals of 22 resident Neotropical species at 500–1390 m asl and collected feather and claw samples. Based on three years of data from year-round sampling, our results suggest that microhabitat, seasonal shifts in moisture δD, and diet all influence bird tissue δD values. Our model results reveal a previously undescribed microgeographical effect on δD, where foraging level (understorey versus overstorey) and foraging location (forest interior versus adjacent coffee plantation) were significant predictors of δD values in bird claws and feathers. Mean claw and feather δD values among species varied from −83‰ to −19‰. Top models for claws and feathers explained 57% and 52% of variation in δD respectively. Direct comparisons of understorey (mean ± SD of −30‰ ± 15‰) versus overstorey (−50‰ ± 15‰) claw values suggest that δD may be useful in tracking vertical, micro-scale movement. Higher δD values in forest understorey birds reveal a heavy reliance upon recycled, fog moisture. Fragmentation and climate change may result in increasingly desiccated cloud forest that may exert a more negative influence on the food webs of understorey species that seem to be supported by recycled sources of moisture in the dry season.