Recent studies have interpreted patterns of remotely sensed tree cover as evidence that forest with intermediate tree cover might be unstable in the tropics, as it will tip into either a closed forest or a more open savanna state. Here we show that across all continents the frequency of wildfires rises sharply as tree cover falls below ~40%. Using a simple empirical model, we hypothesize that the steepness of this pattern causes intermediate tree cover (30–60%) to be unstable for a broad range of assumptions on tree growth and fire-driven mortality. We show that across all continents, observed frequency distributions of tropical tree cover are consistent with this hypothesis. We argue that percolation of fire through an open landscape may explain the remarkably universal rise of fire frequency around a critical tree cover, but we show that simple percolation models cannot predict the actual threshold quantitatively. The fire-driven instability of intermediate states implies that tree cover will not change smoothly with climate or other stressors and shifts between closed forest and a state of low tree cover will likely tend to be relatively sharp and difficult to reverse.