The recent mountain pine beetle outbreak in North American lodgepole pine forests demonstrates the importance of insect related disturbances in changing forest structure and ecosystem processes. Phloem feeding by beetles disrupts transport of photosynthate from tree canopies and fungi introduced to the tree's vascular system by the bark beetles inhibit water transport from roots to canopy; the implications of these processes for tree mortality are poorly understood. We hypothesized that the fungus must quickly disrupt tree water relations because phloem girdling, reported in other studies, requires much longer than a year to cause mortality. We tested the hypothesis in lodgepole pine (Pinus contorta) by comparing tree water use, foliar expansion and seasonal variation in predawn water potential on 8 mechanically girdled trees, 10 control trees and 17 trees attacked by mountain pine beetle (Dendroctonous ponderosae). Transpiration began to decline within ten days of beetle infestation; two months later, pre-dawn water potential had also dropped significantly as water transport to the canopy declined by 60% relative to healthy trees. There was no water transport or foliar expansion by beetle-infested trees the following year. Experimentally girdled trees continued to transpire, maintain leaf water potential and grow new foliage similar to healthy trees. Our data suggest that fungi introduced by bark beetles in this study are the primary cause of tree mortality following mountain pine beetle attack and significantly reduce transpiration soon after beetle infestation. Rapid decline and the eventual cessation of water uptake by infected trees have important implications for water and nutrient cycling in beetle impacted forests.