Protected areas are one of the cornerstones for conserving the world's remaining biodiversity, most of which occurs in tropical forests. We use multiple sources of satellite data to estimate the extent of forest habitat and loss over the last 20 years within and surrounding 198 of the most highly protected areas (IUCN status 1 and 2) located throughout the world's tropical forests. In the early 1980s, surrounding habitat in the 50-km unprotected or less highly protected “buffers” enhanced the protected areas' effective size and their capacity to conserve richness of forest-obligate species above the hypothetical case of complete isolation. However, in nearly 70% of the surrounding buffers, the area of forest habitat declined during the last 20 years, while 25% experienced declines within their administrative boundaries. The loss of habitat occurred in all tropical regions, but protected areas in South and Southeast Asia were most severely affected because of relatively low surrounding forest habitat in the early 1980s and high subsequent loss, particularly in dry tropical forests. The future ability of protected areas to maintain current species richness depends on integrating reserve management within the land use dynamics of their larger regional settings.