Wood decomposition releases almost as much CO2 to the atmosphere as does fossil-fuel combustion, so the factors regulating wood decomposition can affect global carbon cycling. We used metabarcoding to estimate the fungal species diversities of naturally colonized decomposing wood in subtropical China and, for the first time, compared them to concurrent measures of CO2 emissions. Wood hosting more diverse fungal communities emitted less CO2, with Shannon diversity explaining 26 to 44% of emissions variation. Community analysis supports a ‘pure diversity’ effect of fungi on decomposition rates and thus suggests that interference competition is an underlying mechanism. Our findings extend the results of published experiments using low-diversity, laboratory-inoculated wood to a high-diversity, natural system. We hypothesize that high levels of saprotrophic fungal biodiversity could be providing globally important ecosystem services by maintaining dead-wood habitats and by slowing the atmospheric contribution of CO2 from the world’s stock of decomposing wood. However, large-scale surveys and controlled experimental tests in natural settings will be needed to test this hypothesis.