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Background: Forest trees have ecological and economic importance, and Japanese cedar has highly valued wood attributes. Thus, studies of molecular aspects of wood formation offer practical information that may be used for screening and forward genetics approaches to improving wood quality. Results: After identifying expressed sequence tags in Japanese cedar tissue undergoing xylogenesis, we designed a custom cDNA microarray to compare expression of highly regulated genes throughout a growing season. This led to identification of candidate genes involved both in wood formation and later cessation of growth and dormancy. Based on homology to orthologous protein groups, the genes were assigned to functional classes. A high proportion of sequences fell into functional classes related to posttranscriptional modification and signal transduction, while transcription factors and genes involved in the metabolism of sugars, cell-wall synthesis and lignification, and cold hardiness were among other classes of genes identified as having a potential role in xylem formation and seasonal wood formation. Conclusions: We obtained 55,051 unique sequences by next-generation sequencing of a cDNA library prepared from cambial meristem and derivative cells. Previous studies on conifers have identified unique sequences expressed in developing xylem, but this is the first comprehensive study utilizing a collection of expressed sequence tags for expression studies related to xylem formation in Japanese cedar, which belongs to a different lineage than the Pinaceae. Our characterization of these sequences should allow comparative studies of genome evolution and functional genetics of wood species. [ABSTRACT FROM AUTHOR]