Understanding the signficance of habitat fragmentation for ecological function has been a focus in the natural sciences for decades. More recently, the field of economics has begun to assess the drivers and impact of habitat fragmentation, as well as potential policy and market-based mechanisms to address fragmentation. We present a review of the existing economics literature that addresses habitat pattern/fragmentation and we define themes, issues, and next steps for this literature. First, this paper reviews economic modeling and empirical approaches to identifying drivers and patterns of fragmentation. The next section summarizes the literature on analysis of optimal land use patterns and the tradeoffs of managing for ecological and economic objectives. The last literature section contains description of policy and mechanisms for addressing habitat fragmentation in the context of single and multiple landowners who do not manage land for habitat benefits explicitly. We conclude with a discussion of unanswered questions and next steps for research and data analysis on habitat fragmentation.