Hundreds of cankers caused by Ceratocystis smalleyi are associated with hickory bark beetle-attacked bitternut hickory exhibiting rapid crown decline in the north-central and northeastern United States. Discolored sapwood colonized by the fungus commonly underlies the cankers. Field studies were conducted to test the hypothesis that C. smalleyi infections cause vascular system dysfunction in infected trees. Fifty C. smalleyi inoculations made at 1.8 to 3.8 m in height on stems of healthy bitternut hickory trees (13 to 28 cm in diameter at 1.4 m in height) resulted in extensive canker formation and sapwood discoloration 12 to 14 months after treatment compared with water-inoculated and noninoculated controls. Sap flow velocity (midday) was significantly lower in the infected trees compared with that in the controls. Sap flow velocity also was inversely correlated with the proportion of bark area with cankered tissues and with tylose abundance in the youngest two growth rings. Tylose formation in current-year vessels associated with C. smalleyi infections is likely responsible for much of the water transport disruption. It is hypothesized that multiple stem infections of C. smalleyi and the resulting xylem dysfunction contribute to crown wilt development in bitternut hickory exhibiting rapid crown decline.