Paleoclimatic interpretations of the Upper Triassic Chinle Formation (Colorado Plateau) based on plants conflict with those based on the sedimentary rocks. The plants are suggestive of a humid, equable climate, whereas the rocks are more consistent with deposition under highly seasonal precipitation and ground-water conditions. Fossil plant assemblages are limited to the lower members of the Chinle Formation, which were deposited within incised valleys that were cut into underlying Lower to Middle Triassic and older rocks. In contrast, the upper members of the formation, which were deposited across the fluvial plain after the incised valleys were filled, have few preserved fossil plants. The taphonomic characteristics of the plant fossil assemblages, within the stratigraphic and hydrologic context of the incised valley-fill sequence, explain the vertical and lateral distribution of these assemblages. The depositional, hydrological, and near-surface geochemical conditions were more conducive to preservation of the plants. Fossil plant assemblages in fully terrestrial incised-valley fills should be taphonomically biased toward riparian wetland environments. If those assemblages are used to interpret paleoclimate, the paleoclimatic interpretations will also be biased. The bias may be particularly strong in climates such as those during deposition of the Chinle Formation, when the riparian wetlands may reflect local hydrologic conditions rather than regional climate, and should be taken into account when using these types of plant assemblages in paleoclimatic interpretations.