In Norway spruce, a fungistatic reaction zone with a high pH and enrichment of phenolics is formed in the sapwood facing heartwood colonized by the white-rot fungus Heterobasidion parviporum. Fungal penetration of the reaction zone eventually results in expansion of this xylem defense. To obtain information about mechanisms operating upon heartwood and reaction zone colonization by the pathogen, hyphal growth and wood degradation were investigated using real-time PCR, microscopy, and comparative wood density analysis of naturally colonized trees with extensive stem decay. The hyphae associated with delignified wood at stump level were devoid of any extracellular matrix, whereas incipient decay at the top of decay columns was characterized by a carbohydrate-rich hyphal sheath attaching hyphae to tracheid walls. The amount of pathogen DNA peaked in aniline wood, a narrow darkened tissue at the colony border apparently representing a compromised region of the reaction zone. Vigorous production of pathogen conidiophores occurred in this region. Colonization of aniline wood was characterized by hyphal growth within polyphenolic lumen deposits in tracheids and rays, and the hyphae were fully encased in a carbohydrate-rich extracellular matrix. Together, these data indicate that the interaction of the fungus with the reaction zone involves a local concentration of fungal biomass that forms an efficient translocation channel for nutrients. Finally, the enhanced production of the hyphal sheath may be instrumental in lateral expansion of the decay column beyond the reaction zone boundary.