Summary We analyze the oldest fossil occurrences of wound‐response periderm to characterize the development of wound responses in early tracheophytes. The origin of periderm production by a cambium (phellogen), an innovation with key roles in protection of inner plant tissues, is poorly explored; understanding periderm development in early tracheophytes can illuminate key aspects of this process. Anatomy of wound‐response tissues is characterized in serial sections in a new Early Devonian (Emsian; c. 400 Ma) euphyllophyte from Quebec (Canada) – Nebuloxyla mikmaqiana sp. nov. – and compared to previously described euphyllophyte periderm from the same fossil locality to reconstruct periderm development. Characterizing development in these oldest periderm occurrences allows us to propose a model for the development of wound‐response periderm in early tracheophytes: by phellogen activity that is poorly coordinated laterally but bifacial, producing secondary tissues initially outwardly and subsequently inwardly. The earliest occurrences of wound periderm pre‐date the oldest known periderm produced systemically as a regular ontogenetic stage (canonical periderm), suggesting that periderm evolved initially as a wound‐response mechanism. We hypothesize that canonical periderm evolved by exaptation of this wound sealing mechanism, whose deployment was triggered by tangential tensional stresses induced in the superficial tissues by vascular cambial growth from within.