Deforestation and fragmentation are major components of global change; both are contributing to the rapid loss of tropical forest area with important implications for ecosystem functioning and biodiversity conservation. The forests of South Ecuador are a biological 'hotspot' due to their high diversity and endemism levels. We examined the deforestation and fragmentation patterns in this area of high conservation value using aerial photographs and Aster satellite scenes. The registered annual deforestation rates of 0.75% (1976-1989) and 2.86% (1989-2008) for two consecutive survey periods, the decreasing mean patch size and the increasing isolation of the forest fragments show that the area is under severe threat. Approximately 46% of South Ecuador's original forest cover had been converted by 2008 into pastures and other anthropogenic land cover types. We found that deforestation is more intense at lower elevations (premontane evergreen forest and shrubland) and that the deforestation front currently moves in upslope direction. Improved awareness of the spatial extent, dynamics and patterns of deforestation and forest fragmentation is urgently needed in biologically diverse areas like South Ecuador.