Fundamental mechanical and optical properties of papers were considered to comprehensively Study the mechanism of strength development by addition of polyacrylamide dry strength resin (PAM) in relation to the application method. Handsheets made from lightly beaten hardwood kraft pulp with various amount of PAM were prepared by both the internal and external application methods. The internal application method was performed by adding an aqueous PAM solution to pulp fiber suspension, while the external application method was performed by impregnation of aqueous PAM solution into a paper sheet. These sheets gave homogenous PAM distribution through z-direction as well as x- and y-direction of the sheets, irrespective of application method. ATR-FTIR analysis combined with gradual etching method was also used to clarify a difference in depth profile of PAM within and around a fiber wall between both application methods. At the internal application method, PAM existed mainly near fiber surface and distributed within a fiber wall. On the other hand, at the external application, PAM existed mainly on fiber surface and around fiber-to-fiber bonds. The difference in PAM distribution between internal and external application methods caused the difference in the mechanism of strength development. In the internal application method, the molecularly dispersed PAM within a fiber wall forms a kind of PAM-cellulose composite in which the bonding between those composite fibers may be stronger than that between cellulosic pulp fibers, leading to the increase in bond strength per unit bonding area. Furthermore, a slight increase of fiber strength as shown in an increase in zero-span strength might partly contribute the increase in tensile strength. On the other hand a formation of fiber-PAM-fiber bonding at the external method may reinforce fiber-to-fiber bonding. Temperature dependence of storage modulus and tan 6 of the paper sheet containing PAM by internal method was nearly the same as those of base paper and almost no polymeric feature derived from PAM was observed. In contrast that of the paper sheet added with PAM by external method showed the typical polymeric feature from PAM. The increasing behavior of tan 6 with PAM content highly corresponded to the increase in tensile strength at external application method. These results supported the above described mechanism, i.e. a reinforcement of fiber-fiber bonding by the surrounding fiber-PAM-fiber bonding as a major factor of strength increase in the external application method.