Hawaiian tropical dry forests are a unique and highly endangered ecosystem. Remaining fragments are heavily impacted by invasive plant species, particularly the perennial bunchgrass Pennisetum setaceum (Forssk.) Chiov. (fountain grass). Little is known about the impact of invasive species on carbon cycling in terrestrial ecosystems. Biomass estimates are a critical first step in understanding the effects of invasive species on carbon dynamics. Biomass data can be used to quantify carbon pools and fluxes, as well as the impacts of land cover change on carbon sequestration. The objectives of our work were to compare: (1) population structure of the dominant native tree species and (2) carbon pools in aboveground live biomass among three land cover types: native—native dominated, largely intact dry forest; invaded—intact overstory, but understory heavily invaded by P. setaceum; and converted—a formerly forested site that has been converted to grassland dominated by P. setaceum. Invasion of Hawaiian tropical dry forest by P. setaceum leads to an unsustainable population of native trees characterized by a conspicuous absence of saplings and smaller diameter individuals. Aboveground tree biomass did not differ between native (108.1Mgha⁻¹) and invaded (107.0Mgha⁻¹) forests due to the preponderance of wood biomass in large Diospyros sandwicensis trees at both sites. Grass invaded forest had ∼7× more understory biomass than the native forest, but no differences were observed in total aboveground live biomass (tree+understory) between native (108.9Mgha⁻¹) and invaded forests (112.1Mgha⁻¹). However, total aboveground live biomass was ∼93% lower at the converted site (7.8Mgha⁻¹), which is the eventual fate of invaded forests with no natural regeneration of native canopy species. Native forests contained significantly more individuals and leaf biomass for the mid-canopy tree Psydrax odorata, which increased overall stand leaf area index. This structural difference appears to have prevented P. setaceum from invading the native site by reducing understory light levels. These results indicate that large changes in the sequestration of carbon in aboveground biomass have occurred across the landscape following widespread grass invasion and conversion of Hawaiian dry forests to grasslands. These large losses of carbon have important implications for quantifying the effects of invasive species and land cover change on ecosystem carbon storage at landscape and regional scales.