Insertion of thermal dissipation (TD) sap flow sensors in living tree stems causes damage of the wood tissue, as is the case with other invasive methods. The subsequent wound formation is one of the main causes of underestimation of tree water-use measured by TD sensors. However, the specific alterations in wood anatomy in response to inserted sensors have not yet been characterized, and the linked dysfunctions in xylem conductance and sensor accuracy are still unknown. In this study, we investigate the anatomical mechanisms prompting sap flow underestimation and the dynamic process of wound formation. Successive sets of TD sensors were installed in the early, mid and end stage of the growing season in diffuse- and ring-porous trees, Fagus sylvatica (Linnaeus) and Quercus petraea ((Mattuschka) Lieblein), respectively. The trees were cut in autumn and additional sensors were installed in the cut stem segments as controls without wound formation. The wounded area and volume surrounding each sensor was then visually determined by X-ray computed microtomography (X-ray microCT). This technique allowed the characterization of vessel anatomical transformations such as tyloses formation, their spatial distribution and quantification of reduction in conductive area. MicroCT scans showed considerable formation of tyloses that reduced the conductive area of vessels surrounding the inserted TD probes, thus causing an underestimation in sap flux density (SFD) in both beech and oak. Discolored wood tissue was ellipsoidal, larger in the radial plane, more extensive in beech than in oak, and also for sensors installed for longer times. However, the severity of anatomical transformations did not always follow this pattern. Increased wound size with time, for example, did not result in larger SFD underestimation. This information helps us to better understand the mechanisms involved in wound effects with TD sensors and allows the provision of practical recommendations to reduce biases associated with wounding in field sap flow measurements.