Increased dispersal of individuals among discrete habitat patches should increase the average number of species present in each local habitat patch. However, experimental studies have found variable effects of dispersal on local species richness. Priority effects, predators, and habitat heterogeneity have been proposed as mechanisms that limit the effect of dispersal on species richness. However, the size of a habitat patch could affect how dispersal regulates the number of species able to persist. We investigated whether habitat size interacted with dispersal rate to affect the number of species present in local habitats. We hypothesized that increased dispersal rates would positively affect local species richness more in small habitats than in large habitats, because rare species would be protected from demographic extinction. To test the interaction between dispersal rate and habitat size, we factorially manipulated the size of experimental ponds and dispersal rates, using a model community of freshwater zooplankton. We found that high-dispersal rates enhanced local species richness in small experimental ponds, but had no effect in large experimental ponds. Our results suggest that there is a trade-off between patch connectivity (a mediator of dispersal rates) and patch size, providing context for understanding the variability observed in dispersal effects among natural communities, as well as for developing conservation and management plans in an increasingly fragmented world.