The Canadian wood window industry has seen a dramatic decline in its share of the North American market which currently sits in the 4% range whereas it was at 20% a decade ago. The main reason for this outcome can be attributed to the more prevalent use of PVC windows. These windows provide the window manufacturer a technological advantage over wood windows as they are easier to process from extruded lengths of material manufactured elsewhere. From the homeowner’s perspective, PVC windows require little in the way of maintenance during their service life compared to wood windows. A secondary threat to the entire window industry comes from ever more stringent thermal performance requirements be it from government regulations via building code requirements or through having to meet Energy Star requirements. Thermally modified wood is a relatively new process that has been shown to change the physical properties of wood in ways that can be considered to be beneficial for use in window construction. In particular, this modification process changes the way wood fibre reacts with moisture as to make the wood fibre less hygroscopic. As a result the fibre is more dimensionally stable; it is not subjected to the same rate of liquid water uptake; and it is more durable than non-thermally modified wood of the same species. Water-based coating technology has been developed in Canada that has been formulated to adhere to thermally modified wood, somewhat of a past concern with wood fibre that has been thermally modified. The leaders in wood window construction innovation can be found in Europe and, in particular, in Germany. Developments made there in integrating insulation into wood window components and in incorporating the use of thermally modified wood into wood laminated components all point to a direction which the Canadian wood window industry ought to consider. Using typical Canadian wood window design, the overall thermal performance, or U value, improvements made by incorporating the use of thermally modified wood is marginal at 1.5% however, the durability improvements via improved coating adherence over time and the durability improvement of the fibre itself are likely to be substantial. Newly formulated coating systems suited for use with thermally modified wood adhere just as well to thermally modified wood as they do to regular wood of the same species. The Canadian wood window industry can improve its products and take back its market share from PVC windows by incorporating some of the ideas developed in Europe, notably in Germany. This includes integrating insulation materials into the window frame/sash elements and combining them with the appropriate use of thermally modified wood.