Abstract: In normally growing trees of Aquilaria neither oleoresin nor secretory tissues are found in their wood. Starch grains are stored in cells of wood parenchyma, wood ray and included phloem. The oleoresin will form and be deposited in those cells when the trees are forced to oleoresin formation by the traditional method of our drug peasants. The method is to cut some niches or notches on the trunk of the standing tree. Beneath and also above the surface of the notch cut, mycelia spread downward or upward to some extent. Within this area, the stored starch grains begin to dissociate and convert into some other substances which can not be detected on unstained sections, but give a strong or moderately strong positive reaction with PAS, "Nadi", and later, with Schiff's reagent respectively. As time passes, a yellow coloured inclusion can be observed in these cells. At first, it reacts with PAS as well as Schiff's or Millon's reagent, and finally only with Sudan Ⅲ. Based upon the observation mentioned above we conclude that the formation of the oleoresin in this plant is not hereditary but a result of abnormal metabolism of the stored starch grains caused by the parasitic fungus. Polysaccharides other than the starch grain, the carbonyl and phenolic compounds should be the intermediate products in the pathway of this abnormal metabolism.