Unsustainable trade in wildlife is regarded as a major driver of biodiversity loss and ecosystem degradation. Unregulated wildlife trade propels over-exploitation of species, resulting in population declines, and often in combination with other factors may ultimately extirpate species from their natural habitats. Concern about the impacts of trade on biodiversity has largely focused on flagship animal species. Here, we report on the impact of trade on natural populations of the world’s most expensive biological resource, a unique caterpillar fungus (Ophiocordyceps sinensis). Based on interviews with 203 harvesters and 28 traders, and focus group discussions in Dolpa, Nepal, we quantify the amount of harvest and trade. After legalization of trade in Nepal in 2001, trade volume increased persistently, reaching a peak of 2442.4 kg in 2009 and subsequently declining to 1170.8 kg in 2011. The local market price has increased by up to 2300% over the last 10 years. However, mean annual harvest declined from 260.66 ± 212.21 pieces per person in 2006 to 125.82 ± 96.84 pieces per person in 2010. Our analysis of harvesters’ perceptions of resource abundance and sustainability shows that virtually all harvesters (95.1%) believe the availability of the caterpillar fungus in the pastures to be declining, and 67% consider current harvesting practices to be unsustainable.