Leaf-eating insects can influence decomposition processes by modifying quality of leaf litter, and this impact can be especially pronounced in habitats where leaf-eating insects reach high densities, for example in heavily polluted areas. We hypothesized that the decomposition rate is faster for shelters of leaf-tying larvae than for leaves damaged by free-living insects, in particular due to the accumulation of larval frass within shelters. We exposed litter bags containing samples of three different compositions (shelters built by moth larvae, leaves damaged by free-living insects and intact leaves of mountain birch, Betula pubescens ssp. czerepanovii) for one year at two heavily polluted sites near the nickel-copper smelter at Monchegorsk in north-western Russia and at two unpolluted sites. The decomposition rate of leaves damaged by free-living insects was 91% of that of undamaged leaves, whereas the mass loss of leaves composing shelters did not differ of that of undamaged leaves. These differences between leaves damaged by different guilds of herbivorous insects were uniform across the study sites, although the decomposition rate in polluted sites was reduced to 77% of that in unpolluted sites. Addition of larval frass to undamaged leaves had no effect on the subsequent decomposition rate. Therefore we suggest that damaged leaves tied by shelter-building larvae decompose faster than untied damaged leaves due to a looser physical structure of the litter, which creates favourable conditions for detritivores and soil decomposers. Thus, while leaf damage by insects per se reduces litter quality and its decomposition rate, structuring of litter by leaf-tying insects counterbalances these negative effects. We conclude that leaf-tying larvae, in contrast to free-living defoliators, do not impose negative effects on nutrient turnover rate even at their high densities, which are frequently observed in heavily polluted sites.