Rising temperatures and increased frequency and intensity of droughts and heat waves have affected tree mortality rates worldwide. Here, we investigate how these changes have affected the carrying capacity of mountain ash forests (Eucalyptus regnans), the world's tallest flowering plant and one of the most carbon-dense forests on earth. We analyze data from a large network of silvicultural experiments collected between 1947 and 2000 in southeastern Australia to identify trends in mortality rates and carrying capacity for the species, and to quantify how these changes relate to spatiotemporal variations in climate. We show that forests growing in the warmest and highest vapor pressure deficit conditions had the lowest carrying capacity, and this capacity further decreased with rising temperatures. Key findings indicate that a projected three °C increase in temperature by 2080 could reduce tree density and carbon stock in these forests by 24%, equivalent to losing 240,000 hectares of mature mountain ash forests. Trees that died were 0.62 times the size of living trees (i.e., they were suppressed), with no detectable effect of climate on this ratio. We discuss the implications for forest conservation and management, and how reduced carrying capacity could undermine global forest restoration and carbon sequestration efforts.