Phase mixing was introduced by Heyvaerts and Priest [1] as a mechanism for heating plasma in open magnetic field regions. Here we include a stratified density and a diverging background magnetic field. We present numerical and WKB solutions to describe the effect of stratification and divergence on phase mixing of Alfve´n waves. It is shown that the decrease in density lengthens the oscillation wavelengths and thereby reduces the generation of transverse gradients. However, the divergence of the field lines shortens the wavelengths and thus enhances the generation of gradients. Furthermore we found that in a stratified atmosphere, ohmic heating is spread out over a greater height range whereas viscous heating is not strongly influenced by the stratification. A wavelet analysis indicated that the wavelet transform could provide us with information about the medium the waves are traveling through. ©2000 American Institute of Physics.