Projected climate change scenarios such as frequently occurring dry summer spells are an enormous threat to the health of boreal conifer forests. We identified visible features indicating wood with tracheids predisposed for hydraulic and mechanical dysfunction in Norway spruce, suggest why this is formed during severe summer drought and hypothesised on mechanism that would cause tracheid collapse and stem cracks. Trees from southern Sweden that showed signs of severe reaction to drought, i.e. stem cracks along the trunk, were compared to healthy, undamaged trees. Rings investigated included those formed in 2006, a year with an extremely dry summer season in the study region. In southern Norway, we investigated trees with and without drought-induced top dieback symptoms. We analysed anatomical features such as tracheid lumen diameter, thickness of cell wall and its various layers (S1, S2 and S3), applied Raman imaging in order to get information on the lignin distribution in the cell wall and the compound middle lamellae and performed hydraulic flow and shrinkage experiments. Although tracheids in annual rings with signs of collapse had higher tangential lumen diameters than those in “normal” annual rings, we conclude that collapse of tracheid walls depends mainly on wall thickness, which is genetically determined to a large extent. Spruce trees that produce earlywood with extremely thin cell walls can develop wall collapse and internal cracks under the impact of dry spells. We also present a new diagnostic tool for detecting individuals that are prone to cell wall collapse and stem cracks: Lucid bands, i.e. bands in the fresh sapwood with very thin cell walls and inhomogeneous lignin distribution in the S-layers and the compound middle lamellae that lost their hydraulic function due to periods of severe summer drought. The detection of genotypes with lucid bands could be useful for an early selection against individuals that are prone to stem cracks under the impact of severe summer drought, and also for early downgrading of logs prone to cracking during industrial kiln drying.