Thermodynamic theories lay out the foundations for system development, but have rarely been applied to studies of forest ecosystems. This article discussed the thermodynamic processes in the development of forest ecosystems and plant populations based on the exergy theories of ecosystems. We linked the exergy dissipation with the corresponding eco-physiological processes in the forest ecosystems. At the ecosystems level, we divided exergy dissipation into plant dissipation and environment dissipation, and analyzed the relationship between the two processes. We firstly elucidated that transpiration is the fraction of plant exergy dissipation and discussed how to use it to evaluate ecosystem development and plant competitive capacity. At the level of individual plants, we proposed that “exergy storage” and “exergy dissipation” are two important factors determining the outcomes of plant competition. Under the same physical conditions, species with high levels of dissipate energy have competitive advantages. Therefore, dominant species should have faster growth and transpiration rates than the non-dominant species occupying the same physical space. The thermodynamic theory provides a new means for the understanding of forest ecosystem development, assessment of ecosystem health, relationship between plant and environment, and outcomes of species competition.