Thermal modification can increase the physical stability and impact the mechanical strength of wood. It is necessary to understand the effects of modifications on the compressive stress of wood. In this study, Douglas fir (Pseudotsuga menziessi) blocks were modified at 180 °C (TM-180 °C) and 210 °C (TM-210 °C). The compressive stress of pure earlywood (EW), pure latewood (LW), and combined earlywood and latewood (ELW) specimens was measured. The specimens were compressed at 30% of their original thickness, and during the compression test the strain distribution of the ELW was recorded. In addition, the microstructures before and after compression were investigated, complemented with SEM to understand the structural changes taking place. The results showed that the compressive stress of the TM-180 °C specimens was the highest because the thermal modification increased the stiffness of cell walls and the homogenized strain distribution in the ELW specimens. The control specimens had a higher compression set recovery rate than the thermally modified specimens. The tracheid cell walls in the EW and LW specimens were flattened and buckled, respectively, due to compression. In the thermally modified materials, cell wall fissures and wood ray fractures in the EW and LW specimens, respectively, were observed. For the ELW specimens, the structural changes in the latewood were not obvious and the structural changes in the earlywood were less significant than in the full EW specimens. Compared to the EW specimens, the earlywood in the ELW specimens showed higher compression set recovery rates. It seems that structural failure in earlywood is limited when used in combination with latewood, resulting from the homogenized strain distribution in earlywood.