Leaf‐wood separation in terrestrial LiDAR data is a prerequisite for non‐destructively estimating biophysical forest properties such as standing wood volumes and leaf area distributions. Current methods have not been extensively applied and tested on tropical trees. Moreover, their impacts on the accuracy of subsequent wood volume retrieval were rarely explored. We present LeWoS, a new fully automatic tool to automate the separation of leaf and wood components, based only on geometric information at both the plot and individual tree scales. This data‐driven method utilizes recursive point cloud segmentation and regularization procedures. Only one parameter is required, which makes our method easily and universally applicable to data from any LiDAR technology and forest type. We conducted a twofold evaluation of the LeWoS method on an extensive dataset of 61 tropical trees. We first assessed the point‐wise classification accuracy, yielding a score of 0.91 ± 0.03 in average. Second, we evaluated the impact of the proposed method on 3D tree models by cross‐comparing estimates in wood volume and branch length with those based on manually separated wood points. This comparison showed similar results, with relative biases of less than 9% and 21% on volume and length respectively. LeWoS allows an automated processing chain for non‐destructive tree volume and biomass estimation when coupled with 3D modelling methods. The average processing time on a laptop was 90s for 1 million points. We provide LeWoS as an open‐source tool with an end‐user interface, together with a large dataset of labelled 3D point clouds from contrasting forest structures. This study closes the gap for stand volume modelling in tropical forests where leaf and wood separation remain a crucial challenge.