The present allowable stresses for lumber and the associated adjustment factors stated in Canadian Standard CSA-086 are based upon tests conducted using small clear wood specimens. Recent comprehensive tests in which full-size lumber specimens were used (in-grade testing) showed that the present allowable stresses cannot be confirmed and also that new adjustment factors need to be developed.This paper deals with the effect of moisture content on the strength properties. Tests were conducted and reported dealing with: bending, stiffness, tension, compression parallel to grain, compression perpendicular to grain, and shear. From these tests it was possible to make specific recommendations for a new set of moisture content adjustment factors, to be used in design, that more realistically reflect the behaviour of lumber.