Currently in Malaysia, most of the plywood industries are using tropical hardwood veneer with combination of rubberwood to form plywood. The used of rubberwood has actively reduced the cost of plywood production but recently the price of rubberwood logs has increased due to the shortage of the supply. Due to the demand from other timber industries such as furniture and medium density board thus, alternative raw material which is not focuses on lignocellulosic material only but also on the residue can be offered. Oil palm stems (Elaeisguineensis Jacq) need to be explored as these stems are abundant after falling from plantations which have not been fully utilized due to their poor properties. The main drawback of oil palm is its low dimensional stability found in the stem parts. Therefore this study investigated the 100% oil palm stem (OPS) plywood denoted as PTA by optimizing the pre drying process of the veneer by using roller pressing machine, steam dryer and platen press machine. After the OPS veneers have been pre-dried, they were treated with Medium Molecular Weight Phenol Formaldehyde (MMwPF) resin before fabrication of OPS plywood. The product could be promoted as concrete foam, light weight partitions, wall panel and floor slabs. The fracture toughness of OPS plywood developed in this study denoted as PTA was investigated. These properties were compared with the properties of another two types of commercial OPS plywood denoted as PTB and PTC which were manufactured using OPS veneer with tropical hardwood veneer for face and back veneer and control plywood denoted as PTD which was manufactured using 100% tropical hardwood veneer. The highest value of plain strain and energy release was showed by PTA compared to commercial plywood. The failure was more prominent in wood which showed by the crack propagated line in the veneer layer.