What does Matthew 7:20 mean?

This sums up Christ's warning to His followers about false prophets (Matthew 7:15–19). This is part of Matthew's continuing record of the Sermon on the Mount (Matthew 5:1–2). This alert against false teachers applies across all of history, and is part of the Bible's encouragement towards wisdom and truthfulness (Acts 17:11; 1 John 4:1). For His initial audience, Jesus is specifically warning against the leadership of some of Israel's religious teachers. Jesus does not make a blanket statement that all Pharisees or Sadducees or priests are false. Rather, Christ extols a form of cautious skepticism: see what comes out of their lives beyond just their words.

That spiritual fruit (Galatians 5:22–24) may include a leader's character as revealed in the way they treat others, their honesty, their humility, their commitment to living with inner righteousness, as well as external obedience. Their fruit may also include the lives and attitudes of their own followers and disciples.

Jesus has also been clear that those who most fully fall under the category of "false prophets" are not simply wrong about what they believe. The worst and most dangerous of the wolves in sheep's clothing (Matthew 7:15) are intentionally deceptive. They lie, to promote their own position and power. Look closely at their teachings, and what they create, commands Jesus.

This concludes the first half of a two-part warning. After speaking about those who would fool others, Jesus will warn against fooling ourselves (Matthew 7:21).