We document xylem structure and hydraulic properties in the earliest woody plant Armoricaphyton chateaupannense gen. nov. & sp. nov. based on c. 407-million-year-old fossils from the Armorican Massif, western France. The plant was small, and the woody axes were narrow and permineralized in pyrite (FeS2). We used standard palaeobotanical methods and employed propagation phase contrast X-ray synchrotron microtomography (PPC-SRμCT) to create three-dimensional images of the wood and to evaluate its properties. The xylem comprised tracheids and rays, which developed from a cambium. Tracheids possessed an early extinct type of scalariform bordered pitting known as P-type. Our observations indicate that wood evolved initially in plants of small stature that were members of Euphyllophytina, a clade that includes living seed plants, horsetails and ferns. Hydraulic properties were calculated from measurements taken from the PPC-SRμCT images. The specific hydraulic conductivity of the xylem area was calculated as 8.7 kg m−1 s−1 and the mean cell thickness-to-span ratio (t/b)2 of tracheids was 0.0372. The results show that the wood was suited to high conductive performance with low mechanical resistance to hydraulic tension. We argue that axis rigidity in the earliest woody plants initially evolved through the development of low-density woods. © 2014 The Linnean Society of London, Botanical Journal of the Linnean Society, 2014, 175, 423–437.