Abstract Chemical wood modification has been used to modify wood and improve its decay resistance. However, the mode of protective action is still not fully understood. Occasionally, outdoor products made from chemically modified timber (CMT) show internal decay while their outer shell remains intact. Hence, it was hypothesized that wood decay fungi may grow through CMT without losing their capability to degrade non-modified wood. This study aimed at developing a laboratory test set-up to investigate (1) whether decay fungi grow through CMT and (2) retain their ability to degrade non-modified wood. Acetylated and 1,3-dimethylol-4,5-dihydroxyethyleneurea (DMDHEU) treated wood were used in decay tests with modified ‘mantle specimens’ and untreated ‘core dowels’. It became evident that white rot (Trametes versicolor), brown rot (Coniophora puteana) and soft rot fungi can grow through CMT without losing their ability to degrade untreated wood. Consequently, full volume impregnation of wood with the modifying agent is required to achieve complete protection of wooden products. In decay tests with DMDHEU treated specimens, significant amounts of apparently non-fixated DMDHEU were translocated from modified mantle specimens to untreated wood cores. A diffusion-driven transport of nitrogen and DMDHEU seemed to be responsible for mass translocation during decay testing.