This paper presents an innovative design of a tandem extrusion system for fine-celled foaming of plastic/wood-fiber composites using a physical blowing agent (PBA). The plastic/wood-fiber composites utilize wood-fibers (WF) as a reinforcing filler in the plastic matrix and are known to be advantageous over the neat plastics in terms of the materials cost and some improved mechanical properties such as stiffness and strength. However, these improvements are usually accompanied by sacrifices in the ductility and impact resistance. These shortcomings can be reduced by inducing fine-celled or microcellular foaming in these composites, thereby creating a new class of materials with unique properties. An innovative tandem extrusion system with continuous on-line moisture removal and PBA injection was successfully developed. The foamed composites, produced on the tandem extrusion system, were compared with those produced on a single extruder system, and demonstrated significant improvement in cell morphology, resulting from uniform mixing and effective moisture removal. The effects of WF and coupling agent (CA) on the cell morphology were studied. An increase in the WF content had an adverse affect. The cell morphology and foam structures were improved when an appropriate CA was added. (C) 2004 Wiley Periodicals, Inc.