Abstract Wood formation and tree growth depend on the precise spatiotemporal distribution of auxin, yet how woody perennials dynamically regulate local auxin pools remains poorly understood. Here, we demonstrate that the tonoplast-localized transporters WAT1 and WAT2 drive cambial activity, secondary growth, and wood patterning in poplar by controlling stem free auxin availability. Unlike annual models such as Arabidopsis, simultaneous disruption of WAT1 and WAT2 in poplar induces severe dwarfism and marked wood defects, yielding smaller, denser vessel elements, all of which were rescued by genetic complementation. Loss of WAT function depleted stem indole-3-acetic acid (IAA) by up to 96%, without affecting the shoot-resident IAA levels. WAT proteins accumulate in cambial vacuoles in an auxin-dependent manner, peaking during night cycles aligned with maximal auxin responses. Depleting active auxin in wat1 wat2 double mutants triggers broad transcriptomic reprogramming that suppresses cambial proliferation and impairs cell wall remodeling via altered pectin methylesterification. Quantitative data-driven computer model further reveals that WAT proteins function as an intracellular rheostat regulating auxin dynamics across light-dark cycles. Our findings establish that dynamic intracellular compartmentalization fine-tunes local auxin availability in the cambium to ensure robust tree patterning and growth.