Forests display tremendous structural diversity, shaping carbon cycling, microclimates and terrestrial habitats. An important tool for forest structure assessments are canopy height models (CHMs): high resolution maps of canopy height obtained using airborne laser scanning (ALS). CHMs are widely used for monitoring canopy dynamics, mapping forest biomass and calibrating satellite products, but surprisingly little is known about how differences between CHM algorithms impact ecological analyses. Here, we used high-quality ALS data from nine sites in Australia, ranging from semi-arid shrublands to 90-m tall Mountain Ash canopies, to comprehensively assess CHM algorithms. This included testing their sensitivity to point cloud degradation and quantifying the propagation of errors to derived metrics of canopy structure. We found that CHM algorithms varied widely both in their height predictions (differences up to 10 m, or 60% of canopy height) and in their sensitivity to point cloud characteristics (biases of up to 5 m, or 40% of canopy height). Impacts of point cloud properties on CHM-derived metrics varied, from robust inference for height percentiles, to considerable errors in above-ground biomass estimates (~50 Mg ha−1, or 10% of total) and high volatility in metrics that quantify spatial associations in canopies (e.g. gaps). However, we also found that two CHM algorithms—a variation on a ‘spikefree’ algorithm that adapts to local pulse densities and a simple Delaunay triangulation of first returns—allowed for robust canopy characterisation and should thus create a secure foundation for ecological comparisons in space and time. We show that CHM choice has a strong impact on forest structural characterisation that has previously been largely overlooked. To address this, we provide a sample workflow to create robust CHMs and best-practice guidelines to minimise biases and uncertainty in downstream analyses. In doing so, our study paves the way for more rigorous large-scale assessments of forest structure and dynamics from airborne laser scanning.