In sagebrush (Artemisia spp.) ecosystems, encroachment of pinyon (Pinus spp.) and juniper (Juniperus spp.; hereafter, “pinyon-juniper”) trees has increased dramatically since European settlement. Understanding the impacts of this encroachment on behavioral decisions, distributions, and population dynamics of greater sage-grouse (Centrocercus urophasianus) and other sagebrush obligate species could help benefit sagebrush ecosystem management actions. We employed a novel two-stage Bayesian model that linked avoidance across different levels of pinyon-juniper cover to sage-grouse survival. Our analysis relied on extensive telemetry data collected across 6 yr and seven subpopulations within the Bi-State Distinct Population Segment (DPS), on the border of Nevada and California. The first model stage indicated avoidance behavior for all canopy cover classes on average, but individual grouse exhibited a high degree of heterogeneity in avoidance behavior of the lowest cover class (e.g., scattered isolated trees). The second stage modeled survival as a function of estimated avoidance parameters and indicated increased survival rates for individuals that exhibited avoidance of the lowest cover class. A post hoc frailty analysis revealed the greatest increase in hazard (i.e., mortality risk) occurred in areas with scattered isolated trees consisting of relatively high primary plant productivity. Collectively, these results provide clear evidence that local sage-grouse distributions and demographic rates are influenced by pinyon-juniper, especially in habitats with higher primary productivity but relatively low and seemingly benign tree cover. Such areas may function as ecological traps that convey attractive resources but adversely affect population vital rates. To increase sage-grouse survival, our model predictions support reducing actual pinyon-juniper cover as low as 1.5%, which is lower than the published target of 4.0%. These results may represent effects of pinyon-juniper cover in areas with similar ecological conditions to those of the Bi-State DPS, where populations occur at relatively high elevations and pinyon-juniper is abundant and widespread.