Severe climate change and urgent climate action have raised concerns about wood. Overharvesting and increased wood waste are putting immense pressure on sustainable forest management and the global carbon budget. In Germany, a vital wood supplier and user in Europe, the wood supply chain's production, consumption, trade, and recycling have been insufficiently investigated. To tackle this challenge, we conducted a comprehensive dynamic wood flow analysis from 1991 to 2020. Approximately 2143 million cubic meters of standing timber were felled in German forests over the past three decades, with 80% used for materials and 20% for energy purposes. Wood flow patterns were susceptible to market demand and forest disturbances like drought, storms, and insect infestations. The storm in 2007 left a notable impact, leading to the highest figures ever recorded for various wood products. Notably, the net forest carbon sink, carbon storage in forest products, and energy substitution effect (replacing fossil energy with wood) reached 160, 332, and 343 million tons of carbon, respectively. However, the transition to renewable energy, wooden buildings, and wood and paper packaging demands further strains the wood supply chain. To promote sustainable forest management and achieve climate neutrality, we propose potential strategies for consideration.