We examined the relationship between a Chihuahuan Desert grassland keystone species (banner tailed kangaroo rat, Dipodomys spectabilis) and several vegetation and soil indicators of rangeland health in order to define a threshold indicator value for irreversible change in ecosystem structure and function. The abundance of occupied and/or abandoned D. spectabilis burrow-mounds was assessed at 117 sites in south-central New Mexico where previous studies had reported vegetation cover and composition. The most robust indicator for presence/absence of D. spectabilis was shrub cover. D. spectabilis did not occur at sites with shrub cover >20%. It was concluded that a threshold value of 20% shrub cover could be applied to assessment and monitoring of Chihuahuan Desert rangelands because higher shrub cover results in the local extinction of this keystone species. The combination of data on the presence/absence of a keystone species with vegetation and soil indicators provides a method for identifying thresholds of degradation that may be irreversible. Keywords: banner-tailed kangaroo rat, Chihuahuan Desert, desertification, Dipodomys spectabilis, environmental indicators, degradation threshold.