This work evaluated the effect of timber quality features on the full-field mechanics of cross-laminated timber (CLT) panels. Panels were individuallysubjected to destructive out-of-plane loading in the principal panel orientation. A digital image correlation (DIC)-based technique was applied fornon-contact full-field measurement and analysis of panel mechanics. The results for 50 layers show that the stiffness of conventional CLT is largelyreduced by the shear resistance of transverse layers. Notably, heterogeneous timber features, such as knots, can reduce the propagation of shear.These results suggest an optimized panel assembly strategy that can be generalized: If shear is dimensioning in an area, e.g. the transverse or thecentral longitudinal layer, the use of knotty timber in that layers can reduce shear propagation. Knots in the compression zone in longitudinal layershave some negative impact, but knots have the largest negative impact in areas of longitudinal layers under tension. Therefore, it is suggested thecurrent grading criteria in the CLT standard be revised to allow the use of more knotty timber in the transverse layers of CLT; doing so could allowa more profitable use of otherwise low-grade timber while producing a stiffer product. The potential of panels constructed according to such anapproach may allow new applications for CLT in timber construction and should be further explored