Because habitat loss is the primary threat to most species listed under the US Endangered Species Act (ESA), the requirement to designate critical habitat under the ESA intuitively appeals to many conservationists. As the ESA approaches 50 years of implementation, however, it has become clear to many people that species recovery does not always require or even benefit from critical habitat. In some situations, critical habitat may even undercut incentives for private landowners to help recover species. In other situations, however, critical habitat offers indirect or direct benefits to conservation. What are the situations when designation benefits recovery, has no effect on recovery, and undercuts recovery? And how should the US Fish and Wildlife Service and National Marine Fisheries Service decide whether and how to designate critical habitat in each of those situations, especially on private lands, after considering the benefits and costs of designation for recovery? This paper offers perspectives on these questions and a worksheet that the agencies can use to methodically evaluate the advantages and disadvantages of designating an area as critical habitat.