To investigate the effect of moderate thermal modification (TM) on wood properties, American alder (Alnus rubra) wood was treated at 140 °C for 4 h, 8 h and 13 h, the physical and mechanical properties, dimensional stability and color changes of wood were compared and studied. The results showed that the absolute dry density of moderate-TM wood decreased significantly with time except for the 4 h treatment. Moderate TM can significantly reduce the residual stress of wood up to 90.3%. There were no significant differences in MOR and MOE between most moderate TM wood and the control group; moderate TM decreased the moisture absorption and water up-taking of wood significantly; compared to the control group, the swelling of TM wood for 13 h decreased by 24.2% and 16.0% in the tangential and radial direction, respectively, showing a significant improvement in dimensional stability. There were almost no color changes even when wood endured 140 °C and 13 h TM. The moderate TM at 140 °C for 13 h can efficiently improve wood dimensional stability and retains the natural color of wood while causing almost no damage to the wood's mechanical strength.