Climate change sets high pressures on the construction industry to decrease greenhouse gas emissions. Due to the carbon storage properties and potential to use renewable resources efficiently, wooden multi-storey construction (WMC) is an interesting alternative for the construction industry to enhance sustainable development combined with the aesthetic and well-being benefits of wood perceived among many consumers. For forest industry firms, industrial wood construction is a possibility to seek for business opportunities and bring socio-economic benefits for local economies. Despite positive drivers, WMC still remains a niche even in the forest-rich countries.The purpose of our study is to add understanding on the WMC market development by conducting a systematic literature analysis on international peer-reviewed studies from the past 20 years. Our special focus is on the role of WMC in the housing markets studied from the perspectives of the demand, supply and local governance factors. As specific aims, we 1) synthesize the key barriers and enabling factors for the WMC market growth; 2) identify the actors addressed in the existing studies connected to the WMC market development, and 3) summarize research methods and analytical approaches used in the previous studies. As a systematic method to make literature searches in Web of Science and Scopus for years 2000â2020, we employed PRISMA guidelines. By using pre-determined keywords, our searches resulted in a sample of 696 articles, of which 42 full articles were after selection procedure included in-depth content analysis. Our results showed cost-efficiency gains from industrialized prefabrication and perceived sustainability benefits by consumers and architects enabled a WMC market diffusion. The lack of experiences on the WMC, and path dependencies to use concrete and steel continue to be key barriers for increased WMC. Although our research scope was the global WMC market development, most of the literature concerned the Nordic region. The key actors covered in the literature were businesses (e.g., contractors, manufacturers and architects) involved in the wood construction value-chains, while residents and actors in the local governance were seldomly addressed. Currently, case studies, the use of qualitative data sets and focus on the Nordic region dominate the literature. This hinders the generalizability of findings in different regional contexts. In the future, more research is needed on how sustainability-driven wood construction value-chains are successfully shaping up in different geographical regions, and how they could challenge the dominant concrete-based construction regime.