To study hollows of living trees as the natural habitat of Cryptococcus neoformans in an endemic area of cryptococcosis in the northeastern Brazilian region, samples of decaying wood were collected inside the hollows, plated on niger seed agar and inoculated into mice and hamsters. Identification of C. neoformans was based on morphological and physiological tests. Canavanine-glycine-bromothymol medium was used to screen the varieties and Crypto Check Iatron Kit to serotype the isolates. For a period of 29 months C. neoformans var. gattii serotype B was isolated repeatedly from the hollow of a pottery tree (Moquilea tomentosa), pointing to the natural occurrence of C. neoformans var. gatti in decaying wood forming hollows in living trees. Evidence for a natural habitat of the variety gattii other than that related to Eucalyptus camaldulensis are discussed.