According to the equilibrium theory of island biogeography, insularisation will lead to species loss from habitat remnants. Extinctions will continue untill species number equilibrates at a level appropriate for the size and isolation of the island remnants. We tested whether insularisation leads to species loss by comparing plant species numbers on islands of fynbos shrublands surrounded by Afrotemperate evergreen forest with extensive "mainland" tracts of fynbos. Species area curves for islands and subsamples of mainland had significantly different slopes (z island=0.43, z mainland=0.16). Small islands had the fewest species (less than one fifth) relative to mainland samples of similar size. The species area curves intersect at 590 ha so that reserve sizes of this order of magnitude are needed to avoid species losses relative to extensive areas of fynbos.We compared traits of species on islands and mainlands to determine processes most affected by insularisation. Island floras did not differ from the mainland in the mix of dispersal types, pollinator syndromes or proportion of dioecious species. Islands did have significantly fewer species of low stature and significantly more species that survive fire only as seed and not by resprouting. We infer that the main cause of species loss is change in disturbance frequency. Islands have fewer fires and lose species dependent on frequent fires. We predict that island effects could be reduced by judicious fire management of small reserves.