To mitigate the shortage of natural breeding sites in cities, nest-boxes are provided for cavity-nesters. However, these are not the breeding sites these animals originally evolved in and optimised their breeding performance to. It thus remains inconclusive if nest-boxes can provide adequate substitutes, ensuring equivalent fitness returns for breeding animals. Additionally, the majority of knowledge on the ecology of urban birds comes from nest-box populations, but no study to date directly compared fitness consequences of breeding inside nest-boxes in relation to natural-cavities in an urban context. This limits our understanding of the urban ecology of cavity-nesters and addressing its functional meaning. We investigate fitness consequences and life-history trait variation according to the nesting site type to provide a comprehensive understanding of conservation potential of nest-boxes in cities and to support/question generalisations stemming from nest-box studies on urbanization. We directly compare the reproductive performance of two small passerines, blue tits and great tits, breeding in nest-boxes as opposed to natural-cavities in a seminatural forest of a capital city using a quasi-experimental setting. We show that the effects of nest type vary between species: in blue tits, fitness proxies were negatively affected by nest-boxes (lower fledging success and fledgling numbers, longer time spent in nest and later fledging date in comparison to natural-cavities), while great tit performance appeared to be unaffected by nest type. We detected that both species breeding in nest-boxes accelerated incubation onset, but since there were no major differences in pre-hatching traits (lay date, clutch size, hatching rates) between the nest types, we attribute the fitness deterioration to post-hatching effects. Interestingly, overall breeding density of tits in urban natural-cavities was higher than observed in a primeval habitat. Nest-boxes may become an ecological trap for some species and the unaffected species can consequently outcompete them, decreasing overall biodiversity in cities. We highlight the ecological importance of old-growth tree stands, providing natural tree cavities for city-breeding animals. Due to the detected nest type-dependent variation in reproductive performance, we support the criticism regarding the unconditional extrapolation of evolutionary and ecological interpretations of nest-box studies to general populations.