The very different evolutionary pathways of conifers and angiosperms are very informative precisely because their wood anatomy is so different. New information from anatomy, comparative wood physiology, and comparative ultrastructure can be combined to provide evidence for the role of axial and ray parenchyma in the two groups. Gnetales, which are essentially conifers with vessels, have evolved parallel to angiosperms and show us the value of multiseriate rays and axial parenchyma in a vessel-bearing wood. Gnetales also force us to re-examine optimum anatomical solutions to conduction in vesselless gymnosperms. Axial parenchyma in vessel-bearing woods has diversified to take prominent roles in storage of water and carbohydrates as well as maintenance of conduction in vessels. Axial parenchyma, along with other modifications, has superseded scalariform perforation plates as a safety mechanism and permitted angiosperms to succeed in more seasonal habitats. This diversification has required connection to rays, which have concomitantly become larger and more diverse, acting as pathways for photosynthate passage and storage. Modes of growth such as rapid flushing, vernal leafing-out, drought deciduousness and support of large leaf surfaces become possible, advantaging angiosperms over conifers in various ways. Prominent tracheid-ray pitting (conifers) and axial parenchyma/ray pitting to vessels (angiosperms) are evidence of release of photosynthates into conductive cells; in angiosperms, this system has permitted vessels to survive hydrologic stresses and function in more seasonal habitats. Flow in ray and axial parenchyma cells, suggested by greater length/width ratios of component cells, is confirmed by pitting on end walls of elongate cells: pits are greater in area, more densely placed, and are often bordered. Bordered pit areas and densities on living cells, like those on tracheids and vessels, represent maximal contact areas between cells while minimizing loss of wall strength. Storage cells in rays can be distinguished from flow cells by size and shape, by fewer and smaller pits and by contents. By lacking secondary walls, the entire surfaces of phloem ray and axial phloem parenchyma become conducting areas across which sugars can be translocated. The intercontinuous network of axial parenchyma and ray parenchyma in woods is confirmed; there are no “isolated” living cells in wood when three-dimensional studies are made. Water storage in living cells is reported anatomically and also in the form of percentile quantitative data which reveal degrees and kinds of succulence in angiosperm woods, and norms for “typically woody” species. The diversity in angiosperm axial and ray parenchyma is presented as a series of probable optimal solutions to diverse types of ecology, growth form, and physiology. The numerous homoplasies in these anatomical modes are seen as the informative results of natural experiments and should be considered as evidence along with experimental evidence. Elliptical shape of rays seems governed by mechanical considerations; unusually long (vertically) rays represent a tradeoff in favor of flexibility versus strength. Protracted juvenilism (paedomorphosis) features redirection of flow from horizontal to vertical by means of rays composed predominantly or wholly of upright cells, and the reasons for this anatomical strategy are sought. Protracted juvenilism, still little appreciated, occurs in a sizeable proportion of the world’s plants and is a major source of angiosperm diversification.