Wood is a remarkable material with great cultural, economic, and biogeochemical importance. However, our understanding of its formation is poor. Key properties that have not been explained include the anatomy of growth rings (with consistent transitions from low-density earlywood to high density latewood), strong temperature-dependence of latewood density (used for historical temperature reconstructions), the regulation of cell size, and overall growth-temperature relationships in conifer and ring-porous tree species. We have developed a theoretical framework based on observations on Pinus sylvestris L. in northern Sweden. The observed anatomical properties emerge from our framework as a consequence of interactions in time and space between the production of new cells, the dynamics of developmental zone widths, and the distribution of carbohydrates across the developing wood. Here we find that the diffusion of carbohydrates is critical to determining final ring anatomy, potentially overturning current understanding of how wood formation responds to environmental variability and transforming our interpretation of tree rings as proxies of past climates.