Wood decomposition plays a critical role in the carbon cycle by providing nutrients and energy to aquatic ecosystems. However how habitat differences, microbial communities, and resource limitation together drive variation in decay rates is not well-understood. We explored how variation in wood-associated fungal communities influences decay of sections of Guazuma branch wood incubated on land and in freshwater, brackish, and marine habitats for 3-15 mo. in replicate rivers in the tropical eastern Pacific. After 9 months, mass loss on land was faster than in freshwater or marine habitats, but similar to brackish habitats, where up to 50% of wood was consumed by shipworms. After 15 mo. mass loss rates in freshwater remained lower than other aquatic habitats and was associated with lower wood nutrient and higher wood polymer concentrations. Habitat differences in decay rate may in part reflect variation in fungal communities, which show compositional differences at the phylum and order level as well as major shifts in diversity across habitats. Here we show rapid degradation of wood entering tropical rivers by microbes and invertebrates, helping explain the relatively low terrestrial organic carbon inputs to marine sediments despite large inputs of terrestrial carbon into aquatic ecosystems.