The formation of stem strips through partial cambial dieback occurs in a number of long-lived woody species and appears to be associated with old age, slow growth, and habitat adversity. The reason for this association is unknown, and investigations of the cause of stem stripping have been impeded by the strong correlation among the associated factors themselves. Hydraulic sectoring of the xylem is thought to be necessary for stem stripping to occur, and we hypothesize that loss of hydraulic conductance by permanent cavitation of tracheids in parts of the xylem is the first step in stem strip formation. The aim of this study was to identify characteristics of Thuja occidentalis that are directly associated with the presence of stem strips. We used a large data set of 842 T. occidentalis collected randomly from a favorable (cliff-top plateau) and an unfavorable (cliff face) habitat to determine whether age, growth rate, and habitat were directly or indirectly related to the presence of stem strips. To determine whether the diameter of intertracheid pits, which directly controls cavitation resistance, is a possible anatomical mechanism for achieving hydraulic sectoring, we investigated whether pit size showed a pattern that paralleled the occurrence of stem stripping. The results showed that the frequency of stem strips was significantly correlated with tree age, while growth rate and habitat adversity were only indirectly correlated with stem stripping through their correlations with age. Earlywood tracheids of old trees had the largest pits, indicating that these trees are more susceptible to cavitation-related water deficits than young trees and supporting the hypothesis that cavitation of tracheids is involved in stem strip formation. We discuss possible reasons for the correlation between age and stem stripping and present a graphical conceptual model that may explain the ecological function of stem stripping in trees growing in heterogeneous habitat conditions.