The complex structure of wood, one of the most abundant biomaterials on Earth, has been optimized over 270 million years of tree evolution. This optimization has led to the highly efficient water and nutrient transport, mechanical stability and durability of wood. The unique material structure and pronounced anisotropy of wood endows it with an array of remarkable properties, yielding opportunities for the design of functional materials. In this Review, we provide a materials and structural perspective on how wood can be redesigned via structural engineering, chemical and/or thermal modification to alter its mechanical, fluidic, ionic, optical and thermal properties. These modifications enable a diverse range of applications, including the development of high-performance structural materials, energy storage and conversion, environmental remediation, nanoionics, nanofluidics, and light and thermal management. We also highlight advanced characterization and computational-simulation approaches for understanding the structure–property–function relationships of natural and modified wood, as well as informing bio-inspired synthetic designs. In addition, we provide our perspective on the future directions of wood research and the challenges and opportunities for industrialization. The porous hierarchical structure and anisotropy of wood make it a strong candidate for the design of materials with various functions, including load bearing, multiscale mass transport, and optical and thermal management. In this Review, the composition, structure, characterization methods, modification strategies, properties and applications of natural and modified wood are discussed.