Abstract: A method and machine for making a new and improved compressed wood fuel pellet. The method comprising the steps of severing a wafer of tree trunk or branch, punching or splitting a small portion along the grain in the wafer, confining each portion across the grain, and then compressing each portion along the grain to form a compressed wood fuel pellet of contiguous wood having a specific gravity of about 1.2-1.4 with a very high efficiency process and machine.