The formation of caoutchouc in teak sapwood and heartwood was examined in an increment borer core using light microscopy after staining with osmium tetroxide. The distribution of the polyisoprenoid in untreated and extracted heartwood, its influence on surface chemistry, contact angle with water and formation of radicals before and after irradiation with sunlight, and also on decay resistance were determined. Caoutchouc was not observed in the cambial zone and outer sapwood, but occurred from the middle of sapwood as black globule. In sapwood, if available, it was mainly found in the lumen of parenchyma. In heartwood the globule were also detected in fibers and vessel elements. They usually fused into one big or irregular formed structures. SEM of untreated heartwood cuttings showed that lumen of all cell types and also the cut-surfaces were covered with extraneous materials. Extraction with acetone which removed extractives except caoutchouc did not change the surface morphology markedly. Residual caoutchouc still covered cell lumen and cut-surfaces. Successive extraction with acetone and chloroform removed extraneous materials, and lumen surfaces and cut-surfaces became clear. It revealed that caoutchouc occurred also in cell walls. The XPS spectrum of untreated teak heartwood showed a rather high C1, a moderate C2 and a low C3 peak area. After acetone extraction the C1 peak area increased slightly but the C2 and C3 area decreased. Successive extraction with acetone and chloroform caused a significant decrease of C1, but an increase of both C2 and C3 values. Untreated teak heartwood cuttings showed a high contact angle with water, indicating hydrophobic properties. Extraction with acetone increased contact angle slightly. This is explained by removal of polar compounds and redistribution and enrichment of the apolar caoutchouc on the surface. Successive extraction with acetone and chloroform removed all extractives and contact angle was significantly reduced. The ratio of ESR relative signal intensities of free radicals in untreated specimens, acetone extracted and acetonechloroform extracted specimens which were irradiated and non-irradiated showed the highest values for acetone extracted ones, followed by untreated and acetone-chloroform treated specimens. Reconstituted panels made from ethanol extracted teak heartwood meal were decay susceptible. Specimens made from wood meal successively extracted with ethanol and chloroform showed slightly less resistance that specimens made from ethanol extracted ones. The high decay resistance of untreated teak heartwood is postulated due to a synergetic effect of decay active ethanol extracts and non-active caoutchouc.