This research evaluated the mechanics of cross-laminated timber (CLT) panels. Industrially produced panels, configured with 0° longitudinal layers and transverse layers alternating at 90°, were tested. Each panel was subjected to destructive out-of-plane testing in the principal panel orientation to evaluate timber quality features’ impact on the full-field mechanics of CLT. A non-contact full-field measurement and analysis technique based on digital image correlation (DIC) was applied for the main mechanical analysis at different scales. DIC evaluation of 50 layers in CLT panels showed that a considerable part of the stiffness of conventional CLT is reduced by the shear resistance of transverse layers. Heterogeneous timber features, such as knots, reduce the propagation of shear fraction along the layers. These results call into question the present grading criteria in the CLT standard: It is suggested that the current lower grading limit be adjusted for increased value-yield. The measurements analysed in this work suggest an optimized panel assembly strategy that can be generalized. If shear is dimensioning in an area, as seen in the transverse or central longitudinal layer, the use of knotty timber can reduce the shear propagation. Knots in the compression zone in longitudinal layers have some negative impact, but knots have the largest negative impact in areas of longitudinal layers under tension. Therefore, the use of knotty timber is appropriate and recommended for the transverse layers of CLT. Based on these results, CLT should be further explored as a suitable product to potentially facilitate the use of timber panels in more construction applications.