Insect outbreaks are major disturbances that affect a land area similar to that of forest fires across North America. The recent mountain pine bark beetle (D endroctonus ponderosae) outbreak and its associated blue stain fungi (Grosmannia clavigera) are impacting water partitioning processes of forests in the Rocky Mountain region as the spatially heterogeneous disturbance spreads across the landscape. Water cycling may dramatically change due to increasing spatial heterogeneity from uneven mortality. Water and energy storage within trees and soils may also decrease, due to hydraulic failure and mortality caused by blue stain fungi followed by shifts in the water budget. This forest disturbance was unique in comparison to fire or timber harvesting because water fluxes were altered before significant structural change occurred to the canopy. We investigated the impacts of bark beetles on lodgepole pine (Pinus contorta) stand and ecosystem level hydrologic processes and the resulting vertical and horizontal spatial variability in energy storage. Bark beetle-impacted stands had on average 57 % higher soil moisture, 1.5 °C higher soil temperature, and 0.8 °C higher tree bole temperature over four growing seasons compared to unimpacted stands. Seasonal latent heat flux was highly correlated with soil moisture. Thus, high mortality levels led to an increase in ecosystem level Bowen ratio as sensible heat fluxes increased yearly and latent heat fluxes varied with soil moisture levels. Decline in canopy biomass (leaf, stem, and branch) was not seen, but ground-to-atmosphere longwave radiation flux increased, as the ground surface was a larger component of the longwave radiation. Variability in soil, latent, and sensible heat flux and radiation measurements increased during the disturbance. Accounting for stand level variability in water and energy fluxes will provide a method to quantify potential drivers of ecosystem processes and services as well as lead to greater confidence in measurements for all dynamic disturbances.