Woody plants are characterised by a highly complex vascular system, wherein the secondary xylem (wood) is responsible for the axial transport of water and various substances. Previous studies have focused on the dead conductive elements in this heterogeneous tissue. However, the living xylem parenchyma cells, which constitute a significant functional fraction of the wood tissue, have been strongly neglected in studies on tree biology. Although there has recently been increased research interest in xylem parenchyma cells, the mechanisms that operate in these cells are poorly understood. Therefore, the present review focuses on selected roles of xylem parenchyma and its relevance in wood functioning. In addition, to elucidate the importance of xylem parenchyma, we have compiled evidence supporting the hypothesis on the significance of parenchyma cells in tree functioning and identified the key unaddressed questions in the field.