Community assembly processes do not only influence community structure, but can also affect ecosystem processes. To understand the effect of initial community development on ecosystem processes, we studied natural fungal community dynamics during initial wood decay. We hypothesize that fungal community assembly dynamics are driven by strong priority effects of early-arriving species, which lead to predictable successional patterns and wood decay rates. Alternatively, equivalent colonization success of randomly arriving spores has the potential to drive stochastic community composition and wood decay rates over time. To test these competing hypotheses, we explored the changes in fungal community composition in logs of two tree species (one coniferous and one broadleaf) during the early stages of wood decomposition in a common garden approach. Initial communities were characterized by endophytic fungi, which were highly diverse and variable among logs. Over the first year of decomposition, there was little evidence for priority effects, as early colonizers displaced the endophytic species, and diversity fell as logs were dominated by a few fungal species. During this period, the composition of colonizing fungi was related to the decomposition rates of sapwood. During the second year of decomposition, fungal community composition shifted drastically and the successional dynamics varied considerably between tree species. Variation in fungal community composition among coniferous (Larix kaempferi) logs increased, and there remained no evidence for any priority effects as community composition became stochastic. In contrast, early colonizers still dominated many of the deciduous (Quercus rubra) logs, with a temporally consistent impact on community composition. For both tree species, wood decay rates levelled off and the relationship with fungal community composition disappeared. Our results indicate that priority effects are relatively minimal in naturally occurring fungal community assembly processes. Instead, fungal successional dynamics are governed predominantly by combative abilities of colonizing fungi, and factors that shape fungal communities over time can differ considerably between tree species. Our results indicate that an increased focus of competitive strength among species, rather than priority effects, may be key to predict community assembly and the ecosystem process they provide.