The azalea lace bug,Stephanitis pyrioides(Scott), is a primary pest of azaleas throughout the eastern United States. We tested the hypothesis that azaleas growing under high light intensity and low water availability are stressed and consequently promote outbreaks of lace bugs. Azalea plants were grown under four light levels (0, 25, 50, and 75% shade) and two water treatments (high and low). Lace bugs preferred to feed and ovipositon shade-grown instead of sun-grown plants. Similarly, lace bug fitness (adult fecundity and longevity),survivorship, and inflicted plant damage were higher on shade-grown plants, with natural enemies excluded. Lace bug fitness did not differ on azaleas receiving high and low application rates of water. However, plants in the low-water treatment incurred more damage from lace bug feeding, perhaps as a result of increased feeding rate. These data on lace bug preference and fitness are inconsistent with reports in the literature that azaleas in sunny habitats are more prone to lace bug attack. Patterns of lace bug survivorship in exposed (0% shade) and woodlot (>75% shade) habitats rectified the apparent paradox. The survival of uncaged lace bugs was significantly poorer on plants placed in shaded woodlot habitats compared with their survival on plants placed in open settings. Although natural enemy effects were not explicitly tested, we suggest that higher rates of arthropod predation in the shaded woodlot habitat may be responsible for the reduced survival of lace bugs in this habitat. Thus, lace bugs are caught between two opposing environmental constraints and are relegated to sunny habitats, where although their performance is reduced on light- and water-stressed plants, overall survival is greatest. From a management perspective, lace bug infestations in urban landscapes could be minimized by planting azaleas in shaded areas with mixed vegetation and by preventing water deficit.