Woodpeckers require trees and snags with decayed wood in order to excavate nest and roost cavities, and interior wood hardness is considered an important factor determining where a woodpecker can create a cavity. In most ecosystems, saprophytic fungi are responsible for the decay and softening of wood, and are thought to be important in providing soft wood for woodpecker cavity excavation. We conducted a study of cellulose-degrading enzymes in the wood surrounding woodpecker nest cavities. We measured wood hardness, percent wood density loss (PWDL), and activity of cellobiase (an extracellular fungal cellulase that degrades cellulose) within wood surrounding the nest cavities of the northern flicker (Colaptes auratus), black-backed woodpecker (Picoides arcticus), white-headed woodpecker (Dryobates albolarvatus), and hairy woodpecker (D. villosus) in Oregon and Washington. We found that mean wood hardness was significantly lower, and cellobiase and PWDL were significantly higher, at nest cavities than controls for each woodpecker species. Wood hardness was higher and cellobiase lower at nests of black-backed woodpecker than northern flicker, but did not differ among the other woodpecker species. Our results suggest that increased amounts of cellobiase result in softer wood due to the increased decay caused by higher fungal enzyme activity and that measuring cellobiase can be used to estimate wood decay without directly measuring wood hardness. All four woodpecker species selected nest substrates with softer wood and higher fungal enzyme activity than controls. This supports findings from previous studies of the importance of saprophytic fungi for woodpecker cavity excavation.