Wood decomposition is a key component of carbon cycling. However, our understanding of decomposition is limited by the absence of information regarding wood separated from the forest floor, which represents approximately half of total woody debris. We hypothesized that turnover in microbial (bacterial and fungal) community structure from the ground to the canopy causes decreasing rates of decomposition. To test this hypothesis, we used standardized wood sticks and metabarcoding to provide the first replicated assessment of decomposition and decomposer microbial community structure along a vertical gradient within a tropical forest. Community composition and functional groups of fungi and bacteria covaried strongly from ground to canopy, and both microbial groups exhibited distinct community types at different levels within the forest. Mass loss from wood sticks was strongly associated with both microclimate conditions and microbial community composition. However, unlike the continuous turnover of microbial communities, wood decomposition exhibited a binary pattern such that differences in decomposition were driven by soil contact and associated with increased moisture content. These findings are contrary to dominant models of decomposition that primarily consider environmental effects at larger scales and thus take an important first step in challenging the contemporary, ground-based understanding of decomposition. Contrasting patterns in the relative abundance of bacterial and fungal saprotrophs observed in this study suggest that additional work is needed to delineate the roles of invertebrate, fungal, and bacterial decomposers in higher levels of the forest.