Fungi readily colonize the inner bark (phloem) of spruce and other conifers despite these tissues having a high concentration of antifungal defense metabolites. These compounds include stilbenes, flavonoids and other phenolic substances, mostly present as glucosides. Yet the underlying biochemical mechanisms by which fungi resist conifer phenolics remain largely unresolved. Using untargeted metabolomics, structural elucidation and biological and biochemical assays, we investigated how and why fungi metabolize the major phenolics of Norway spruce (Picea abies). Various fungi, including those associated with bark beetles, were found to hydrolyze stilbene glucosides to their corresponding aglucones. Two basidiomycetes, the saprotroph Coprinellus radians and Cylindrobasidium ipidophilum, a symbiont of the Eurasian spruce bark beetle Ips typographus, then converted the stilbene aglucones into α-ribofuranosylated derivatives, revealing a previously unrecognized pathway in tree-colonizing fungi. Ribosylation markedly reduced the antifungal activity of the aglucones and stabilized them against hydrolysis by fungal and I. typographus enzymes, preventing regeneration of the toxic aglucones. Ribosylation was also correlated with increased growth on spruce bark-containing medium. Hence, the ability to overcome major conifer bark defenses by conversion of toxic stilbene aglucones to non-toxic α-ribosides may explain the successful colonization of this tissue by fungi, some of which support I. typographus attack.