Wood, or secondary xylem, is a water-conductive and supportive vascular tissue highly characteristic of trees. In addition to parenchymatous cells adapted for storage and transport functions, wood is mainly composed of various vertically elongated cell types. These are classified either as tracheary elements or fibers, both of which are characterized with extensive secondary cell wall thickenings. The cell wall characteristics contribute to the properties of wood as a significant raw material for various human applications. Wood formation occurs during the secondary phase of plant development. This results from the activity of the vascular cambium, a lateral meristem that is established and functional during the secondary phase. On the other hand, already the primary phase of vascular development, associated with the procambial development of apical meristems, involves xylem production. The formation of both primary and secondary xylem involves a cascade of interesting processes including specification of primary vascular tissue as bundles, cell proliferation within the primary bundles or in the secondary vascular cambium, initiation of xylem differentiation, regulation of cell expansion, deposition of a secondary cell wall, and programmed cell death. Even as these processes have been extensively documented at the structural level, relatively little is known of the genetic mechanisms behind them. Although wood formation is an evident characteristic of trees, also many herbaceous plants, including Arabidopsis, develop vascular cambium and form secondary xylem. Thus, Arabidopsis can be considered as a model for the developmental processes underlying xylem development during both primary and secondary phases of development. In this Update we will first review the most recent work related to each developmental process resulting in xylem formation and finally focus on the secondary phase of development to compare wood development in Arabidopsis and trees in light of the most recent molecular data.