Wood is the most abundant biological resource on earth and it is also an important raw material for a major global industry with rapidly increasing demand. The genus Eucalyptus includes the most widely used tree species for industrial plantation, mainly for making pulp and paper. With the aim of identifying major genes involved in wood formation in Eucalyptus , we have developed a targeted approach of functional genomics based on the isolation of xylem preferentially expressed genes by subtractive PCR. Transcript profiling using cDNA arrays and analysis of variance (ANOVA) were used to identify differentially expressed ESTs between secondary xylem and leaves. Real-time RT-PCR was performed to confirm the differential expression of representative EST. Of 224 independent EST sequences obtained, 81% were preferentially expressed in xylem. One-third of the ESTs exhibiting homologies with proteins of known function fell into two main classes highlighting the importance of the auxin signalling through ubiquitin-dependent proteolysis on one hand, and of the enzymes involved in cell wall biosynthesis and remodelling, on the other. The functions of the genes represented by the remaining 61% of ESTs should be of great interest for future research. This systematic analysis of genes involved in wood formation in Eucalyptus provides valuable insights into the molecular mechanisms involved in secondary xylem differentiation as well as new candidate-genes for wood quality improvement.