Recovery of cactus ferruginous pygmy-owls (Glaucidium brasilianum cactorum) in Arizona will likely depend on efforts to restore habitat and foster immigration from neighboring northern Sonora, Mexico where pygmy-owls are more abundant. Because populations of pygmy-owls have declined in Arizona, information on population and demographic trends in neighboring Sonora, Mexico has important implications for management and recovery. In 2006, I continued to monitor pygmy-owls in northern Sonora within 75 km of Arizona where an estimated 30% decline in abundance was observed between 2000 and 2005. In 2006, I surveyed all 54 km of transects that have been surveyed each year since 2000, estimated occupancy in 102 territories, and monitored 47 nests within 110 km of Arizona. Between 2000 and 2006, abundance of pygmy-owls within 75 km of Arizona has declined by 4.4 ± 1.9% (± SE) per year (P = 0.0027) or 26% overall. Between 2002 and 2006, territory occupancy within 110 km of Arizona declined 3.2 ± 1.2% per year (P = 0.010) or 13% overall. Clutch size and productivity were low in 2002 and 2006 and high between 2003 and 2005 (P ≤ 0.0087), with much less evidence of similar trends in nest success (P = 0.15). Annual estimates of clutch size and nest success increased with quantity of winter or annual rainfall that occurred before the nesting season (P ≤ 0.097), productivity increased from low to moderately high levels of winter rainfall and decreased sharply thereafter (P = 0.018), and abundance increased with quantity of winter rainfall after a 2-year time lag (P = 0.047). These trends and those of other studies in arid environments suggest rainfall may be driving regional population and demographic dynamics of pygmy-owls, likely by influencing food availability. Continued declines of pygmy-owls in northern Sonora may reduce recovery prospects in Arizona unless active measures are taken.