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Oil palm is one of the world's most rapidly increasing crops. We assess its contribution to tropical deforestation and review its biodiversity value. Oil palm has replaced large areas of forest in Southeast Asia, but land-cover change statistics alone do not allow an assessment of where it has driven forest clearance and where it has simply followed it. Oil palm plantations support much fewer species than do forests and often also fewer than other tree crops. Further negative impacts include habitat fragmentation and pollution, including greenhouse gas emissions. With rising demand for vegetable oils and biofuels, and strong overlap between areas suitable for oil palm and those of most importance for biodiversity, substantial biodiversity losses will only be averted if future oil palm expansion is managed to avoid deforestation.