Abstract: An outdoor wood-fired furnace which heats water for domestic use and provides heat is disclosed. The furnace has a water jacket, sides, top and ends. A main distribution chamber is provided for air on its bottom with outlet means to the firebox. The water jacket includes a large containment area in the top and an L-shaped baffle, having a horizontal leg and a vertical leg. Behind and above this L-shaped baffle is a similarly shaped air space which provides a passage between the baffle and the liquid cooled rear wall and the container for hot gases from the firebox to enter a flue. Means is provided to emit air from the main distribution chamber side through pipes to the fire.