Species richness and evenness are the two major components of biodiversity, but the way in which they are interrelated is a subject of contention. We found a negative relationship between the two variables for bird communities at 92 woodland sites across Australia and sought an explanation. Actual evapotranspiration (AET) was by far the best predictor of species richness. When AET was controlled for, the relationship between richness and evenness became nonsignificant. Richness is greater at sites with higher AET because such sites support a greater number of individuals. However, such sites have a greater number of rare species, resulting in lower evenness. A complicating factor is that evenness is best predicted by degree of vegetation cover, with sparsely vegetated sites having significantly lower evenness. We conclude that there are two competing ecological processes, related to energy and water availability, that determine richness and evenness. The first drives total abundance (leading to high richness, low evenness), while the second drives productivity and niche availability (leading to high richness, high evenness). The relative strength of these two processes and the observed relationship between richness and evenness are likely to depend on the scale of the analysis and the species and range of habitats studied.