In Traffic, Wood primarily played flute and saxophone, occasionally contributing keyboards and vocals. Wood also co-wrote several of Traffic's songs, particularly during the earlier period of the band's recording career. His most notable contribution is as the co-writer (with Steve Winwood and Jim Capaldi), of "Dear Mr. Fantasy".^<3>

Wood played with Jimi Hendrix in 1968, appearing on Electric Ladyland. While Winwood temporarily joined supergroup Blind Faith in 1969, Wood, Mason and Capaldi joined Mick Weaver of Wynder K Frog, playing first as Mason, Capaldi, Wood and Frog, but soon as "Wooden Frog".^<4> He then went on to tour the United States with Dr. John, where he met singer Jeanette Jacobs (formerly of the 1960s girl group The Cake). Wood and Jacobs married in 1969, when he was 25 and she was 19.

In 1969, Wood also appeared on the eponymous second album of Free and the Small Faces' The Autumn Stone. In 1970, Wood and his wife, along with Steve Winwood, joined Ginger Baker's Air Force, releasing one album before reforming Traffic. Wood remained with Traffic from the time of its 1970 reformation until its 1974 breakup. He played on John Martyn's Inside Out (1973).

Through much of his life, Wood suffered from addiction to drugs and alcohol, which were initially attributed to a fear of flying.^<1> His wife Jeanette, from whom he had separated but was still on good terms, had died in 1980, at the age of 30, from the effects of a seizure. Wood was profoundly affected by her death.^<1>