AbstractThe trunks of forest trees store massive amounts of carbon, but fungi actively and invisibly decay wood inside even seemingly healthy trees. Wood‐decay fungi are responsible for the loss of stored carbon in living trees, and they make trees susceptible to snapping and uprooting in storms. We used sonic tomography to measure the prevalence and severity of decay in 1744 live trees (≥20 cm diameter) of 171 species on the 50‐ha Forest Dynamics Plot on Barro Colorado Island, Panama. A median of <2% of the cross‐sectional trunk area showed decay, but 15% of trees had >20% decay. Twenty percent of the combined basal area showed decay, representing a loss of approximately 1% of aboveground biomass. Larger trees more often showed internal decay, with one quarter of trees showing decay before reaching canopy height. Decay severity varied by species; 23% of species showed <2% decay while 9% of species lost over half their basal area. Rare species were more affected than locally abundant species, and species with traits associated with a fast life history were more susceptible to decay. These results suggest that hidden wood decay affects a large proportion of living tropical forest trees.