Worldwide biomass demand for industrial applications, especially for production of biofuels, is increasing. Extended cultivation of fast growing trees such as poplars may contribute to satisfy the need for renewable resources. However, lignin, which constitutes about 20-30% of woody biomass, renders poplar wood recalcitrant to saccharification. Genetic engineering of the enzymes of the lignification pathway has resulted in drastic decreases in lignin and greatly improved the carbohydrate yield for ethanol fermentation. While uncovering key enzymes for lignification facilitated rapid biotechnological progress, knowledge on field performance of low-lignin poplars is still lagging behind. The major biotic damage is caused by poplar rust fungi (Melampsora larici-populina), whose defense responses involve lignification and production of phenolic compounds. Therefore, manipulation of the phenylpropanoid pathway may be critical and should be tightly linked with new strategies for improved poplar rust tolerance. Emerging novel concepts for wood improvement are discussed.