Fungi are the dominant organisms decomposing leaf litter in streams and mediating energy transfer to other trophic levels. However, less is known about their role in decomposing submerged wood. This study provides the first estimates of fungal production on wood and compares the importance of fungi in the decomposition of submerged wood versus that of leaves at the ecosystem scale. We determined fungal biomass (ergosterol) and activity associated with randomly collected small wood (<40 mm diameter) and leaves in two southern Appalachian streams (reference and nutrient enriched) over an annual cycle. Fungal production (from rates of radiolabeled acetate incorporation into ergosterol) and microbial respiration on wood (per gram of detrital C) were about an order of magnitude lower than those on leaves. Microbial activity (per gram of C) was significantly higher in the nutrient-enriched stream. Despite a standing crop of wood two to three times higher than that of leaves in both streams, fungal production on an areal basis was lower on wood than on leaves (4.3 and 15.8 g C m(-2) year(-1) in the reference stream; 5.5 and 33.1 g C m(-2) year(-1) in the enriched stream). However, since the annual input of wood was five times lower than that of leaves, the proportion of organic matter input directly assimilated by fungi was comparable for these substrates (15.4 [wood] and 11.3% [leaves] in the reference stream; 20.0 [wood] and 20.2% [leaves] in the enriched stream). Despite a significantly lower fungal activity on wood than on leaves (per gram of detrital C), fungi can be equally important in processing both leaves and wood in streams.