Abstract: A furnace using pelletized wood as a fuel and a system for controlling the operation of the furnace are described. Pelletized wood stored in a hopper is fed into the combustion chamber of the furnace from an elevated position; and combustion of the pelletized wood is controlled by microprocessor-based circuit which receives input signals representative of the interior and exterior temperatures of the building, the air flow and the level of fuel in the combustion chamber and processes this information in accordance with a predetermined program to switch the furnace into one of two modes. In the `low` mode, the exterior temperature is below a certain value for example, 0.degree. C., but the interior temperature is above it. In this case a fire is maintained in the combustion chamber in anticipation of the interior temperature falling beneath this value.