Wood density plays a key role in ecological strategies and life history variation in woody plants, but little is known about its anatomical basis in shrubs. We quantified the relationships between wood density, anatomy, and climate in 61 shrub species from eight field sites along latitudinal belts between 31° and 35° in North and South America. Measurements included cell dimensions, transverse areas of each xylem cell type and percentage contact between different cell types and vessels. Wood density was more significantly correlated with precipitation and aridity than with temperature. High wood density was achieved through reductions in cell size and increases in the proportion of wall relative to lumen. Wood density was independent of vessel traits, suggesting that this trait does not impose conduction limitations in shrubs. The proportion of fibers in direct contact with vessels decreased with and was independent of wood density, indicating that the number of fiber-vessel contacts does not explain the previously observed correlation between wood density and implosion resistance. Axial and radial parenchyma each had a significant but opposite association with wood density. Fiber size and wall thickness link wood density, life history, and ecological strategies by controlling the proportion of carbon invested per unit stem volume.