A long-term onsite assessment of the hygrothermal performance of a wood frame wall system is presented in this work. The system was applied in a wood demonstration house within the Lake Tai climate zone of Suzhou, China. The hygrothermal performance of the cavity insulation wall was determined from the temperature, relative humidity, and from the temperature of the wood material surface throughout the year. The results clearly indicated the effect of the cavity insulation, cladding cavity ventilation, and air-vapor barrier. Thermal performance was very good due to the wall cavity insulation. Cladding cavity ventilation was effective at low relative humidity of the insulated wall cavities. Condensation and mold growth were not found inside the wall during the test period. The wood frame wall system had good hygrothermal performance and may be widely used in hot summer and cold winter climate zones in China.