Both are fungal decay of timber and both need water to start, which is why they are confused. The difference that matters is behaviour: wet rot stays where the water is, and dry rot can spread through masonry into dry timber some distance away. That single distinction decides how much of the building has to be opened up.
What does wet rot look like, and what are dry rot early signs?
Wet rot is much the commoner. The timber is dark, soft and spongy while wet, and shrinks and cracks along the grain as it dries. It is localised to where the water has been: a window sill under a failed seal, a joist end in a damp wall, the bottom of a door frame. Dry rot is the one people fear. It shows as deep cube shaped cracking across and along the grain, a dull brown crumbly timber, and often white or grey cottony growth with strands running over masonry, sometimes with a flat rusty red fruiting body shedding fine rust coloured spore dust.
The name is misleading
Dry rot does not occur in dry conditions. It needs damp timber to establish, typically above around twenty percent moisture content, in still unventilated conditions. What earns it the name is that once established it can transport moisture along its own strands into timber that was previously dry, and those strands can travel through and behind plaster and masonry. That is why a dry rot outbreak in one room can appear in the next, and why the investigation is larger than the visible damage.
Smell, dry rot spores and whether it is dangerous
An active outbreak often has a distinctive damp mushroom smell, and a strong musty smell in a cellar or under a floor with no visible cause is worth investigating. The spore dust is a nuisance and an irritant rather than the acute health hazard it is sometimes presented as; the real danger is structural, because decayed joist ends, bearings and lintels lose strength. Treat it as a building integrity problem and get the structure assessed if floors feel soft or bounce.
Wet rot treatment and dry rot: water first, chemicals second
The first and largest part of any honest treatment is finding and stopping the water, because neither fungus survives in dry timber. After that: cut out decayed timber back to sound material with an adequate margin, replace with treated timber and isolate new timber from damp masonry, improve ventilation to the void, and apply a fungicidal treatment where it is justified. Be cautious of a quote that leads with extensive chemical application and wholesale plaster removal without a clear account of where the water came from.
A dry rot survey, and which dry rot specialists to use
A timber and damp survey should measure, open up where needed and explain the moisture source, and the most useful ones come from someone who is not also selling the remedial contract. Where a contractor does both, ask for the findings separately from the quotation and get a second opinion on anything large. A guarantee is worth what the company issuing it is worth, so ask whether it is insurance backed.
Questions people ask about dry rot vs wet rot
Which is worse, dry rot or wet rot?
Dry rot, because it can spread through masonry into previously dry timber, so the extent is usually larger than it looks. Wet rot stays where the water is and stops when the timber dries.
Can I treat rot myself?
Small localised wet rot, such as a window sill, is a reasonable competent DIY repair once the water is stopped. Suspected dry rot is not, because the question is how far it has travelled.
Does dry rot always mean major work?
Not always, and it always means a proper investigation. Caught early with the water source found, the works can be modest. Left running behind plaster for years, they are not.
How do I know if it is still active?
Active growth is damp, often with visible strands or a fruiting body and a mushroom smell. Dried out historic damage can look alarming and be inert. A survey that measures moisture content answers it.