Models of impacts of climate change on species are generally based on correlations between current distributions and climatic variables, rather than a detailed understanding of the mechanisms that actually limit distribution. Many of the vertebrates endemic to rainforests of northeastern Australia are restricted to upland forests and considered to be threatened by climate change. However, for most of these species, the factors controlling their distributions are unknown. We examined the role of thermal intolerance as a possible mechanism limiting the distribution of Pseudochirops archeri (green ringtail possum), a specialist arboreal folivore restricted to rainforests above an altitude of 300 m in Australia's Wet Tropics. We measured short-term metabolic responses to a range of ambient temperatures, and found that P. archeri stores heat when ambient temperatures exceed 30°C, reducing water requirements for evaporative cooling. Due to the rate at which body temperature increases with ambient temperatures >30°C, this strategy is not effective over periods longer than 5 h. We hypothesise that the distribution of P. archeri is limited by interactions between (i) the duration and severity of extreme ambient temperatures (over 30°C), (ii) the scarcity of free water in the rainforest canopy in the dry season, and (iii) constraints on water intake from foliage imposed by plant secondary metabolites and fibre. We predict that dehydration becomes limiting for P. archeri where extreme ambient temperatures (>30°C) persist for more than 5 h per day over 4-6 days or more. Consistent with our hypothesis, the abundance of P. archeri in the field is correlated with the occurrence of extreme temperatures, declining markedly at sites where the average maximum temperature of the warmest week of the year is above 30°C. Assuming the mechanism of limitation is based on extreme temperatures, we expect impacts of climate change on P. archeri to occur in discrete, rapid events rather than as a slow contraction in range.