Yes! This hand felted wool birdhouse can be hung outside as well as inside, and yes, small birds like wren, chickadees, nuthatch and titmouse may go inside! The 1 1/4 inch hole is sized for use by small birds but can be enlarged to 1 1/2 inch to appeal to larger birds such as Bluebirds and Tree Swallows. Birds might also pull at the wool to use in making their own nests. Hang one up and see what happens! The body is made of 100 percent naturally water repellent wool and rarely gets wet inside. Surface moisture from dew, rain or snow quickly dries in the open air. Wool is also naturally dirt and mold resistant. Each birdhouse is hand crafted by skilled artisans in Kathmandu, Nepal.