The large quantity of moisture in wood‐flour may lead to the deterioration of the cell structure of foamed plastic wood‐flour composites in terms of cell size, non‐uniformity, and poor surface quality. Since these anomalies can cause poor mechanical properties of the foamed composites, the removal of the moisture from wood‐flour becomes a critical issue with respect to the improvement of these properties. The wood‐flour in this experimental study was first oven‐dried at different temperatures and then subjected to acetone extraction and thermogravimetric analysis (TGA). The oven‐dried wood‐flour was blended with plastic and then subjected to extrusion foaming. The results obtained from the TGA studies indicate that most volatiles were released from the extractives. Conversely, a comparative experimental study of the foaming behavior of these plastic/wood‐flour composites versus that of undried wood‐flour composites confirms that removal of the adsorbed moisture from wood‐flour results in a better cell morphology. However, it seems that some gaseous emissions released from wood‐flour are soluble in plastic and thereby favorably contribute to the development of the cell morphology. This paper describes the expansion mechanisms of wood‐flour composite foams resulting from the adsorbed moisture and dissolved gaseous emissions as well as resulting from the finely dispersed undissolved gas bubbles released from a chemical blowing agent.