Significance Habitable rocky worlds require a supply of essential volatile elements (C, H, N, and S). These are plentiful in early solar systems but depleted during processes leading to planet formation. Here, evidence for loss during differentiation of small precursor bodies (planetesimals) is derived from iron meteorites, which are samples of planetesimal cores. Reconstruction of the C and S contents of planetesimal cores indicates severe C depletions compared to inferred original planetesimal compositions. Modeling of depletion processes shows that preferential loss of C compared to S is transferred to cores during differentiation. Iron meteorites preserve evidence of a key devolatilization stage in the formation of habitable planets and suggest pervasive carbon loss is likely associated with the birth of terrestrial worlds.