Forests in the tropics and subtropics harbor most of the world’s biodiversity and provide essential services but are under high and rising pressure from land-use change. Protected areas (PAs) are a central tool to protect remaining forests, but whether they are effective in reaching this goal is often unclear. Their effectiveness also depends on whether PAs displace deforestation pressure into their surroundings (i.e., leakage) or, conversely, may prevent deforestation even beyond their boundaries (i.e., blockage). However, leakage and blockage effects remain typically unstudied. Here, we assess the effectiveness of PAs in the Gran Chaco, a global deforestation hotspot spanning Argentina, Paraguay, and Bolivia. We used a high-resolution woodland loss time series in a robust impact-evaluation design to assess the effectiveness of PAs, including potential leakage or blockage effects. Our work provides three main insights. First, only ∼34 % of the PAs in the Chaco effectively curbed woodland loss inside their boundaries. Second, leakage was rare, yet many PAs blocked woodland loss in their surroundings. Third, our findings were consistent across different countries, governance levels, and PA sizes. Overall, our results highlight a substantial underperformance of Chaco’s PA network in lowering or halting woodland loss, likely due to inadequate funding of PAs and weak law enforcement. Yet, the substantial blocking effect we identify here is a hopeful sign for avoiding PA isolation in the Chaco. These findings emphasize the potential of strengthening PA management to leverage conservation impact, inside and beyond their boundaries in global deforestation hotspots.