Protected areas are a key tool in the conservation of global biodiversity and carbon stores. We conducted a global test of the degree to which more than 18,000 terrestrial protected areas (totalling 5,293,217 km2) reduce deforestation in relation to unprotected areas. We also derived indices that quantify how well countries' forests are protected, both in terms of forested area protected and effectiveness of protected areas at reducing deforestation, in relation to vertebrate species richness, aboveground forest carbon biomass and background deforestation rates. Overall, protected areas did not eliminate deforestation, but reduced deforestation rates by 41%. Protected area deforestation rates were lowest in small reserves with low background deforestation rates. Critically, we found that after adjusting for effectiveness, only 6.5%-rather than 15.7%-of the world's forests are protected, well below the Aichi Convention on Biological Diversity's 2020 Target of 17%. We propose that global targets for protected areas should include quantitative goals for effectiveness in addition to spatial extent.