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Abstract Site occupancy models (SOMs) are a common tool for studying the spatial ecology of wildlife. When observational data are collected using passive monitoring field methods, including camera traps or autonomous recorders, detections of animals may be temporally autocorrelated, leading to biased estimates and incorrectly quantified uncertainty. We presently lack clear guidance for understanding and mitigating the consequences of temporal autocorrelation when estimating occupancy models with camera trap data.We use simulations to explore when and how autocorrelation gives rise to biased or overconfident estimates of occupancy. We explore the impact of sampling design and biological conditions on model performance in the presence of autocorrelation, investigate the usefulness of several techniques for identifying and mitigating bias and compare performance of the SOM to a model that explicitly estimates autocorrelation. We also conduct a case study using detections of 22 North American mammals.We show that a join count goodness‐of‐fit test previously proposed for identifying clustered detections is effective for detecting autocorrelation across a range of conditions. We find that strong bias occurs in the estimated occupancy intercept when survey durations are short and detection rates are low. We provide a reference table for assessing the degree of bias to be expected under all conditions. We further find that discretizing data with larger windows decreases the magnitude of bias introduced by autocorrelation. In our case study, we find that detections of most species are autocorrelated and demonstrate how larger detection windows might mitigate the resulting bias.Our findings suggest that autocorrelation is likely widespread in camera trap data and that many previous studies of occupancy based on camera trap data may have systematically underestimated occupancy probabilities. Moving forward, we recommend that ecologists estimating occupancy from camera trap data use the join count goodness‐of‐fit test to determine whether autocorrelation is present in their data. If it is, SOMs should use large detection windows to mitigate bias and more accurately quantify uncertainty in occupancy model parameters. Ecologists should not use gaps between detection periods, which are ineffective at mitigating temporal structure in data and discard useful data.