Seven hundred and eighty two isolates corresponding to 52 fungal taxa have been obtained from 920 segments of healthy and symptomatic twigs of Eucalyptus grandis, incubated on media with water potential −0·138 MPa and −4·19 MPa. Only thirty taxa were isolated at frequencies of 2% and greater. The composition of species isolated from bark of healthy twigs incubated on media with both water potentials was similar, with Aureobasidium pullulans being dominant. Sistrotrema brikmannii was the main species isolated from xylem of healthy twigs at −0·138 MPa whereas Pleospora sp. and Sphaeropsis eucalyptus were the dominant species isolated from this material on medium at −4·19 MPa. Fusicoccum eucalypti and Cytospora chrysosperma were most commonly isolated from bark and xylem of symptomatic twigs. Correspondence analysis showed the fungal species associated with each tissue. Summer drought followed by frequent frost in early autumn may have incited wounds allowing fungal invasion of the bark of twigs.