We have used molecular techniques to investigate the diversity and distribution of the arbuscular mycorrhizal (AM) fungi colonizing tree seedling roots in the tropical forest on Barro Colorado Island (BCI), Republic of Panama. In the first year, we sampled newly emergent seedlings of the understory treelet Faramea occidentalis and the canopy emergent Tetragastris panamensis, from mixed seedling carpets at each of two sites. The following year we sampled surviving seedlings from these cohorts. The roots of 48 plants were analysed using AM fungal-specific primers to amplify and clone partial small subunit (SSU) ribosomal RNA gene sequences. Over 1300 clones were screened for random fragment length polymorphism (RFLP) variation and 7% of these were sequenced. Compared with AM fungal communities sampled from temperate habitats using the same method, the overall diversity was high, with a total of 30 AM fungal types identified. Seventeen of these types have not been recorded previously, with the remainder being similar to types reported from temperate habitats. The tropical mycorrhizal population showed significant spatial heterogeneity and nonrandom associations with the different hosts. Moreover there was a strong shift in the mycorrhizal communities over time. AM fungal types that were dominant in the newly germinated seedlings were almost entirely replaced by previously rare types in the surviving seedlings the following year. The high diversity and huge variation detected across time points, sites and hosts, implies that the AM fungal types are ecologically distinct and thus may have the potential to influence recruitment and host composition in tropical forests.