The role of habitat choice behavior in the dynamics of predator-prey systems is explored using simple mathematical models. The models assume a three-species food chain in which each population is distributed across two or more habitats. The predator and prey adjust their locations dynamically to maximize individual per capita growth, while the prey's resource has a low rate of random movement. The two consumer species have Type II functional responses. For many parameter sets, the populations cycle, with predator and prey "chasing" each other back and forth between habitats. The cycles are driven by the aggregation of prey, which is advantageous because the predator's saturating functional response induces a short-term positive density dependence in prey fitness. The advantage of aggregation in a patch is only temporary because resources are depleted and predators move to or reproduce faster in the habitat with the largest number of prey, perpetuating the cycle. Such spatial cycling can stabilize population densities and qualitatively change the responses of population densities to environmental perturbations. These models show that the coupled processes of moving to habitats with higher fitness in predator and prey may often fail to produce ideal free distributions across habitats.