The deciduous bark habit is widespread in the woody plant genus Eucalyptus. Species with deciduous bark seasonally shed a layer of dead bark, thereby maintaining smooth-bark surfaces on branches and stems as they age and increase in diameter. This has a significant cost in terms of fire protection, because smooth-barked species have thinner bark than rough-barked species that accumulate successive layers of dead bark. Eucalypts are closely associated with fire, suggesting that the smooth-bark habit must also provide a significant benefit. We suggest that this benefit is corticular photosynthesis. To test this, we quantified the contribution of corticular photosynthesis to wood production in smooth-barked branches of Eucalyptus miniata growing in tropical savanna in northern Australia. We covered branch sections with aluminum foil for 4 years to block corticular photosynthesis and then compared the oxygen and carbon stable isotope composition of foil-covered and uncovered branch sections. We developed theory to calculate the proportion of wood constructed from corticular photosynthate and the mean proportional refixation rate during corticular photosynthesis from the observed isotopic differences. Coverage with aluminum foil for 4 years increased wood δ13C by 0.5‰ (P = 0.002, n = 6) and wood δ18O by 0.5‰ (P = 0.02, n = 6). Based on these data, we estimated that 11% ± 3% of wood in the uncovered branch sections was constructed from corticular photosynthate, with a mean δ13C of −34.8‰, and that the mean proportional refixation rate during corticular photosynthesis was 0.71 ± 0.15. This demonstrates that corticular photosynthesis makes a significant contribution to the carbon economy of smooth-barked eucalypts.