The high energy demand in central and southern Chile generates serious air pollution problems and energy poverty due to the excessive use of firewood for heating. Firewood is the cheapest and most available fuel in this region and it is widely used due to the cold climate and the poor energy efficiency of buildings. This study assesses the potential of the high-energy efficiency Passivhaus standard to reduce both energy poverty and air pollution in this geographical area, by exploring wooden based solutions. This material is abundant in the area and has several technical and environmental advantages for construction. This study is based on the design, construction, and performance verification of the first house that complies with the Passivhaus standard in Chile. This house was designed and built entirely of wood in the city of Valdivia. The data of the process was analyzed and especially the energy performance of the house, which shows that comfortable temperatures can be maintained throughout the year in this city of the southern region of Chile, without the need of using heating systems. This shows a great potential to tackle both air pollution and energy poverty in this area of the country.