Large areas of moist tropical forest are exposed to periodic droughts that may become more severe through global and regional climate change. But little is known of how forests will respond to greater drying. We report that an Amazon forest exposed to partial rainfall exclusion for five years exhibited unexpected responses with important implications for carbon emissions and forest fire. Although the forest initially avoided many effects of drought by withdrawing soil moisture to a depth of 15 m, the mortality of large canopy trees increased six-fold as soil moisture was depleted. Wood production declined 70% while litterfall and belowground production changed little. Forest flammability increased 100 fold through the decline of leaf area index (30%) and the accumulation of fuel on the forest floor. These drought responses caused a 10% reduction in forest carbon content and an estimated release of 2 Pg of carbon to the atmosphere from forests across the Amazon during the severe droughts of 1998 and 2005, assuming the responses can be generalized. Carbon emissions and forest impoverishment are greater where drought-induced increases in flammability lead to forest fire which, itself, may provoke further drying. Drought ranks with deforestation as one of the most serious threats to moist tropical forests.