To study hollows of living trees as natural habitats of Cryptococcus neoformans in an endemic area of cryptococcosis in the northeastern region of Brazil, samples of decaying wood were collected inside 32 hollows of living trees and plated on niger seed agar. Identification of C. neoformans was based upon morphological and physiological tests. Canavanine-glycine-bromothymol medium was used to screen the varieties and Crypto Check Iatron Kit to serotype the isolates. A total of 123 C. neoformans colonies were recovered from samples of six (18.5%) out of 32 hollow trees. C. neoformans var. neoformans and C. neoformans var. gattii were found occurring alone (pink shower tree, fig tree and pottery tree) or sharing the same hollow (pink shower tree). Long lasting positivity (19-36 months) and significant number of cfu of C. neoformans per gram of decaying wood (0.15-21.7 x 10(3) cfu g(-1)) inside hollows of pink shower tree, fig tree and pottery tree were observed, indicating colonization of these habitats by the fungus. For the first time, C. n. var. neoformans and C. n. var. gattii were found sharing the same natural biotope, thus establishing a possible link between them in their life cycle in nature and suggesting the primary natural niche for the species.