Despite the crucial roles of phytohormones in plant development, comparison of the exact distribution profiles of different hormones within plant meristems has thus far remained scarce. Vascular cambium, a wide lateral meristem with an extensive developmental zonation, provides an optimal system for hormonal and genetic profiling. By taking advantage of this spatial resolution, we show here that two major phytohormones, cytokinin and auxin, display different yet partially overlapping distribution profiles across the cambium. In contrast to auxin, which has its highest concentration in the actively dividing cambial cells, cytokinins peak in the developing phloem tissue of a Populus trichocarpa stem. Gene expression patterns of cytokinin biosynthetic and signaling genes coincided with this hormonal gradient. To explore the functional significance of cytokinin signaling for cambial development, we engineered transgenic Populus tremula × tremuloides trees with an elevated cytokinin biosynthesis level. Confirming that cytokinins function as major regulators of cambial activity, these trees displayed stimulated cambial cell division activity resulting in dramatically increased (up to 80% in dry weight) production of the lignocellulosic trunk biomass. To connect the increased growth to hormonal status, we analyzed the hormone distribution and genome-wide gene expression profiles in unprecedentedly high resolution across the cambial zone. Interestingly, in addition to showing an elevated cambial cytokinin content and signaling level, the cambial auxin concentration and auxin-responsive gene expression were also increased in the transgenic trees. Our results indicate that cytokinin signaling specifies meristematic activity through a graded distribution that influences the amplitude of the cambial auxin gradient.