While democracies are thought to have the power, authority, and ability to make significant reductions in forest loss, cross-national research yields contradictory findings. Previous research finds that democracy increases forest loss, decreases forest loss, and has no impact on forest loss. This article argues that these mixed findings are because within democracies, institutional structures of governance vary. While some democracies may have strong governance, others may not, which may explain contradictory findings in previous research. To test this claim, this article includes an interaction term between four measures of democracy (polyarchy, vertical, diagonal, and horizontal) and three national governance measures (i.e., control of corruption, rule of law, and government effectiveness) using ordinary least squares (OLS) regression for a sample of 86 low‐ and middle‐income nations. The dependent variable is the change in forest loss from 2001 to 2014. The findings suggest that democracy decreases forest loss more at higher levels of governance than lower levels of governance. These results suggest that democracies alone will not reduce forest loss, but that democracies with strong governance can reduce forest loss.