The genetic manipulation of perennial woody tree species presents a range of additional challenges compared to that of annual weedy crop species. These include long generation times and reproductive cycle, the heterogeneity of plants under investigation and, when investigating wood properties, a number of physical and biochemical limitations to microscopical and molecular experimentation. The use of in vitro wood formation systems for molecular studies and Agrobacterium-mediated introduction of transgenes overcomes many of these obstacles. Using a commercially relevant Eucalyptus species as model organism, we demonstrate here that in vitro wood formation systems can be readily employed to introduce transgenes into growing wood-producing tissue, initially leading to frequent transient gene expression in a range of cell types. Stable transformation events were observed as sectors of transformed tissue derived from primary transformation events in individual cells. The usefulness of such systems for the analysis of gene function during the process of wood formation and wood quality determination, as well as for constructing developmental fate maps of cambial derivatives, is discussed.