The New Zealand short-tailed bat Mystacina tuberculata evolved in the absence of terrestrial mammals and initially with few potential predators. Unusual among bats, it is well adapted for the capture of prey on the ground. Bats from Fiordland, New Zealand had relatively low wing loadings and aspect ratios adapted for flight in cluttered habitats. We predicted that M. tuberculata would locate prey in air (uncluttered space) by echolocation. Echolocation call sequences associated with prey capture (terminal buzzes) were heard in the field, and bats detected and localized prey suspended on fishing line by echolocation in a flight cage. The bats emitted brief, multiharmonic echolocation calls at low duty cycle during search phase, and 64% of calls contained most energy in the fundamental harmonic. Approach- and terminal-phase calls were also broadband and multiharmonic. We predicted that bats would not use echolocation to locate prey hidden on the ground in leaf litter (cluttered space). Bats seemed unable to locate hidden prey precisely from the air and instead hunted for such prey while crawling. Echolocation calls were emitted at a low repetition rate on the ground, suggesting that here echolocation was used for orientation and not for prey detection. We experimentally removed cues available to the bats and showed that bats located mealworms in leaf litter by listening for prey-generated noises and possibly by olfaction.