Thermal modification or heat treatment is an effective method to improve the dimensional stability and biological durability of wood. An undesired side effect is the reduction of mechanical properties of wood, mainly due to the high temperatures involved (150-280°C). In this thesis the effects of heat treatment on wood properties are discussed in relation to anatomical and molecular changes found in wood after heat treatment. The results are based on investigations of a full-scale industrial heat treatment method under relative mild conditions (< 200°C) including a moist and dry treatment stage. Several changes and/or modifications of the main components of wood (cellulose, hemicelluloses and lignin) appear to be involved in the effects of heat treatment on important wood properties like dimensional stability, strength/stiffness and biological durability. Although the effect of heat treatment on the anatomical structure of wood is limited, changes have been found affecting the properties of wood. This thesis provides a better understanding of thermal modification, which probably contributes to a more controlled use of heat-treated wood in service conditions