The biophysical effects of forests on climate have been extensively studied with climate models. However, models cannot accurately reproduce local climate effects due to their coarse spatial resolution and uncertainties, and field observations are valuable but often insufficient due to their limited coverage. Here we present new evidence acquired from global satellite data to analyse the biophysical effects of forests on local climate. Results show that tropical forests have a strong cooling effect throughout the year; temperate forests show moderate cooling in summer and moderate warming in winter with net cooling annually; and boreal forests have strong warming in winter and moderate cooling in summer with net warming annually. The spatiotemporal cooling or warming effects are mainly driven by the two competing biophysical effects, evapotranspiration and albedo, which in turn are strongly influenced by rainfall and snow. Implications of our satellite-based study could be useful for informing local forestry policies.