Wood industries produce large volumes of residues which must be utilized, marketed or properly disposed of. Heaps of wood residues are common features in wood industries throughout the year. In Nigeria, this residue is generally regarded as waste and this has led to open burning practices, dumping in water bodies or dumping in an open area which constitutes environmental pollution. Sawmills in Nigeria generated over 1,000,000 m3 of wood waste in 2010 while about 5000 m3 of waste was generated in plywood mills. Nigeria generates about 1.8 million tons of sawdust annually and 5.2 million tons of wood wastes. The impact of improper disposal of waste wood on the environment affects both the aquatic and terrestrial ecosystems. Also burning of waste wood releases greenhouse gases into the atmosphere causing various health issues. Reuse/recycling of these wood residues in Nigeria will reduce the pressure on our ever decreasing forests, reduce environmental pollution, create wealth and employment. The literature available on this subject was reviewed and this article, therefore, focuses on the various methods of wood waste disposal and its utilization in Nigerian wood industries, the effects of wood waste on the environment as well as on human health and the benefits of proper wood waste management practices.