Abstract Thermal modification is a well-established commercial technology for improving the dimensional stability and durability of timber. Numerous reviews of thermally modified timber (TMT) are to be found in the scientific literature, but until now a review of the influence of cell wall moisture content during the modification process on the properties of TMT has been lacking. This paper reviews the current state of knowledge regarding the hygroscopic and dimensional behaviour of TMT modified under dry (cell wall at nearly zero moisture content) and wet (cell wall contains moisture) conditions. After an overview of the topic area, the review explores the literature on the thermal degradation of the polysaccharidic and lignin components of the cell wall, as well as the role of extractives. The properties of TMT modified under wet and dry conditions are compared including mass loss, hygroscopic behaviour and dimensional stability. The role of hydroxyl groups in determining the hygroscopicity is discussed, as well as the importance of considering the mobility of the cell wall polymers and crosslinking when interpreting sorption behaviour. TMT produced under wet processing conditions exhibits behaviour that changes when the wood is subjected to water leaching post-treatment, which includes further weight loss, changes in sorption behaviour and dimensional stability, but without any further change in accessible hydroxyl (OH) content. This raises serious questions regarding the role that OH groups play in sorption behaviour. Graphical abstract