Abstract This study investigated the communities of fungi on Magnolia liliifera wood in terrestrial and freshwater habitats in northern Thailand. Freshly fallen samples of M. liliifera wood were collected from the forest floor, oven dried, and then placed in the stream or adjacent to the stream on the forest floor as baits. The samples were collected and examined after 3 and 6 months of submersion and periodically over 29 months from the forest floor. Thirty-seven species of lignicolous fungi were discovered from 50 bait samples of wood submerged in the stream. Fungi obtained from submerged baits were compared with those found on wood of M. liliifera in terrestrial habitats (both naturally terrestrial and terrestrial baits). The fungal communities on wood in freshwater were distinct from those in the terrestrial habitat. Seventeen species of fungi overlapped between freshwater and terrestrial habitats, but only five out of 234 species overlapped between all habitats (freshwater, natural terrestrial and terrestrial bait). Corynespora cassiicola (60% frequency of occurrence) was the most common taxon found on natural terrestrial samples, while Lasiodiplodia theobromae (43% frequency of occurrence) was the dominant species from terrestrial baits. Candelabrum brocchiatum (26%) was the most common species from submerged baits. The common genera of fungi obtained from submerged baits were similar to those reported in other submerged wood studies.