Predator effects on prey demography have traditionally been ascribed solely to direct killing in studies of population ecology and wildlife management. Predators also affect the prey's perception of predation risk, but this has not been thought to meaningfully affect prey demography. We isolated the effects of perceived predation risk in a free-living population of song sparrows by actively eliminating direct predation and used playbacks of predator calls and sounds to manipulate perceived risk. We found that the perception of predation risk alone reduced the number of offspring produced per year by 40%. Our results suggest that the perception of predation risk is itself powerful enough to affect wildlife population dynamics, and should thus be given greater consideration in vertebrate conservation and management.