Demand for traditional medicine ingredients is causing species declines globally. Due to this trade, Himalayan caterpillar fungus ( Ophiocordyceps sinensis ) has become one of the world’s most valuable biological commodities, providing a crucial source of income for hundreds of thousands of collectors. However, the resulting harvesting boom has generated widespread concern over the sustainability of its collection. We investigate whether caterpillar fungus production is decreasing—and if so, why—across its entire range. To overcome the limitations of sparse quantitative data, we use a multiple evidence base approach that makes use of complementarities between local knowledge and ecological modeling. We find that, according to collectors across four countries, caterpillar fungus production has decreased due to habitat degradation, climate change, and especially overexploitation. Our statistical models corroborate that climate change is contributing to this decline. They indicate that caterpillar fungus is more productive under colder conditions, growing in close proximity to areas likely to have permafrost. With significant warming already underway throughout much of its range, we conclude that caterpillar fungus populations have been negatively affected by a combination of overexploitation and climate change. Our results underscore that harvesting is not the sole threat to economically valuable species, and that a collapse of the caterpillar fungus system under ongoing warming and high collection pressure would have serious implications throughout the Himalayan region.