Aim To assess spatial relationships between avian community similarity and level of urbanization. We tested the following hypotheses for taxonomic similarity: Hypothesis A ' the decline in taxonomic similarity with distance is stronger for the least urbanized locations compared to the most urbanized locations; Hypothesis B ' the converse of Hypothesis A; and Hypothesis C ' the decline in taxonomic similarity with distance is stronger for the most and least urbanized locations compared to locations with intermediate levels of urbanization. We also determined if increasing urbanization led to increased functional similarity within bird communities. Location South-eastern Australia. Methods Bird species occurrence and density were sampled across 18 towns and 72 neighbourhoods occupying a spatial gradient of up to 882 km. We calculated pairwise values in taxonomic similarity among each town and neighbourhood using the Sørenson coefficient and a similarity measure that accounts for differences in species richness among locations. These values were plotted against pairwise distances among towns and neighbourhoods using linear regression to measure similarity'distance relationships. Neighbourhoods were categorized into four levels of urban development based on dwelling density, urban intensity, vegetation cover, or the density of native, nectar-rich plants.Variation in bird species density across neighbourhoods and frequency of occurrence across broad habitat types (habitat specialization) was used to assess functional similarity of bird communities in each neighbourhood. Results Among the 18 towns, the decline in taxonomic similarity with distance was weak and significantly less than among regional bird communities that occurred within a 1 grid square around each town. Among the 72 neighbourhoods, similarity'distance relationships differed substantially depending on the level of urban development. Generally, the strongest decline in similarity with distance was for neighbourhoods with the highest and lowest dwelling density, urban intensity and vegetation cover, supporting Hypothesis C. The functional similarity of bird communities increased significantly with dwelling density, and decreased significantly with an increasing density of nectar plants.Main conclusions At the town level, urbanization appears to homogenize regional bird communities. Among neighbourhoods, similarity'distance relationships are substantially influenced by the level of urban development, and increasing urbanization leads to greater functional similarity within bird communities.