Indole acetic acid (IAA/auxin) profoundly affects wood formation but the molecular mechanism of auxin action in this process remains poorly understood. We have cloned cDNAs for eight members of the Aux/IAA gene family from hybrid aspen (Populus tremula L. x Populus tremuloides Michx.) that encode potential mediators of the auxin signal transduction pathway. These genes designated as PttIAA1-PttIAA8 are auxin inducible but differ in their requirement of de novo protein synthesis for auxin induction. The auxin induction of the PttIAA genes is also developmentally controlled as evidenced by the loss of their auxin inducibility during leaf maturation. The PttIAA genes are differentially expressed in the cell types of a developmental gradient comprising the wood-forming tissues. Interestingly, the expression of the PttIAA genes is downregulated during transition of the active cambium into dormancy, a process in which meristematic cells of the cambium lose their sensitivity to auxin. Auxin-regulated developmental reprogramming of wood formation during the induction of tension wood is accompanied by changes in the expression of PttIAA genes. The distinct tissue-specific expression patterns of the auxin inducible PttIAA genes in the cambial region together with the change in expression during dormancy transition and tension wood formation suggest a role for these genes in mediating cambial responses to auxin and xylem development.