In a comparison of cambial cells and their derivatives between naturally occurring dwarf and normal trees, vessel elements and fibers in the annual rings of dwarf trees were found to be shorter, narrower and fewer than those of normal trees. The frequency of anticlinal divisions and loss of cambial initials were low during the differentiation of xylem cells from cambial initials in dwarf trees. The length and intrusive growth of fusiform initials were slightly less than those of normal trees. Thus, it was concluded that the shortening of vessel elements and fibers in dwarf trees was due to the fact that cambial initials were themselves shortened and underwent inactive intrusive growth during differentiation of the xylen mother cells.