In forest ecosystems, ectomycorrhizal and saprotrophic fungi play a central role in the breakdownof soil organicmatter (SOM).Competitionbetween these two fungal guilds has long been hypothesized to lead to suppression of decomposition rates, a phenomenon known as the ‘Gadgil effect’. In this review, we examine the documentation, generality, and potential mechanisms involved in the ‘Gadgil effect’. We find that the influence of ectomycorrhizal fungi on litter and SOM decomposition is much more variable than previously recognized. To explain the inconsistency in size anddirectionof the ‘Gadgil effect’,weargue that abetter understanding of underlying mechanisms is required. We discuss the strengths and weaknesses of each of the primary mechanisms proposed to date and how using different experimental methods (trenching, girdling, microcosms), as well as considering different temporal and spatial scales, could influence the conclusions drawn about this phenomenon. Finally, we suggest that combining new research tools such as high-throughput sequencing with experiments utilizing natural environmental gradients will significantly deepen our understanding of the ‘Gadgil effect’ and its consequences on forest soil carbon and nutrient cycling.