Fraser fir (Abiesfraseri(Pursh) Poir.) seedlings were artificially infested with balsam woolly adelgid,Adelgespiceae(Ratz.), then subjected to drought-stress treatments. Infestation caused a distinct swelling in the main stem, caused by the accumulation of abnormal wood (i.e., "rotholz"). As expected, drought stress reduced diameter growth in the main stem. However, the reduction in wood increment caused by drought stress was relatively small for infested seedlings as compared with uninfested seedlings, owing to the production of rotholz. This implies that infested trees expend considerable energy and nutrients for the production of poorly functioning wood even during periods of stress. The implications of this research for interpreting patterns of tree mortality in the southern Appalachian Mountains are discussed.