Habitat restoration is vital in enhancing degraded ecosystem by reinstating vegetation coverage, shelter provision, food availability, and connectivity among other factors. In this regard, this paper reviews how habitat restoration, along with artificially created habitats, contributes to biodiversity, the interaction of species, and ecosystem functioning in degraded areas. Specifically, the analysis focuses on the habitat conditions in the buffer zone of the Sathyamangalam Tiger Reserve, Erode District, Tamil Nadu, India. Degraded dry forests, restored shrub lands, boundaries of grasslands, wetlands, and agricultural lands are some of the habitats within this buffer zone. Artificial structures, including brush piles, log piles, rock shelters, woody debris, nest boxes, and artificial burrows, have been included as micro-habitats for small mammals. The results suggest that plots with artificial habitat structures showed better recovery compared with those without such structures. The number of species increased from 3 in degraded sites to 9 in restored sites with artificial habitats. The mean abundance also increased from 18 in degraded sites to 64 in restored sites with artificial habitats. High diversity is observed in restored habitats with artificial habitats, reflecting better habitat complexity and more effective species interaction. This study has found that artificial habitats are helpful in the early stages of restoration by providing shelter, nesting opportunities, insulation, and pathways for moving before natural habitats develop.