Swedish forest and environmental policies imply that forests should be managed so that all naturally occurring species are maintained in viable populations. This requires maintenance of functional networks of representative natural forest and cultural woodland habitats. We first review the policy implementation process regarding protected areas in Sweden 1991–2010, how ecological knowledge was used to formulate interim short-term and strategic long-term biodiversity conservation goals, and the development of a hierarchical spatial planning approach. Second, we present data about the amount of formally protected and voluntarily set aside forest stands, and evaluate how much remains in terms of additional forest protection, conservation management and habitat restoration to achieve forest and environmental policy objectives in the long-term. Third, a case study in central Sweden was made to estimate the functionality of old Scots pine, Norway spruce and deciduous forest habitats, as well as cultural woodland, in different forest regions. Finally, we assess operational biodiversity conservation planning processes. We conclude that Swedish policy pronouncements capture the contemporary knowledge about biodiversity and conservation planning well. However, the existing area of protected and set-aside forests is presently too small and with too poor connectivity. To bridge this gap, spatial planning, management and restoration of habitat, as well as collaboration among forest and conservation planners need to be improved.