The building sector, including building operations and materials, was responsible for the emission of ∼11.9 gigatons of global energy-related CO2 in 2020, accounting for 37% of the total CO2 emissions, the largest share among different sectors. Lowering the carbon footprint of buildings requires the development of carbon-storage materials as well as novel designs that could enable multifunctional components to achieve widespread applications. Wood is one of the most abundant biomaterials on Earth and has been used for construction historically. Recent research breakthroughs on advanced engineered wood products epitomize this material's tremendous yet largely untapped potential for addressing global sustainability challenges. In this review, we explore recent developments in chemically modified wood that will produce a new generation of engineered wood products for building applications. Traditionally, engineered wood products have primarily had a structural purpose, but this review broadens the classification to encompass more aspects of building performance. We begin by providing multiscale design principles of wood products from a computational point of view, followed by discussion of the chemical modifications and structural engineering methods used to modify wood in terms of its mechanical, thermal, optical, and energy-related performance. Additionally, we explore life cycle assessment and techno-economic analysis tools for guiding future research toward environmentally friendly and economically feasible directions for engineered wood products. Finally, this review highlights the current challenges and perspectives on future directions in this research field. By leveraging these new wood-based technologies and analysis tools for the fabrication of carbon-storage materials, it is possible to design sustainable and carbon-negative buildings, which could have a significant impact on mitigating climate change.