Wood carving is probably the most prolific of crafts in Khiva, with every other Madrassah converted into a wood work shop. Large felled tree trunks can be seen outside many of the houses in the Ichan Kala; a give away sign that a wood carver lives there. Wood carving has become a lucrative business, as the nouveau rich from Urgench and Tashkent order decadent dining room tables and throne chairs. Tourism is also a good earner with Koran stands, boxes of all shapes and sizes, cutting boards and walking sticks making excellent souvenirs. Khiva offers a much better selection of wood than Bukhara or Samarkand and the craftsmanship is, in general, to a very high standard.

Whilst black elm wood is most commonly used, apricot, walnut and oak are also alternatives. The islimi design is most popular. Paper with the design is placed over the wood and the pattern is then pin pricked through. This is usually done by apprentices who start as young as eight or nine years old, coming to the workshop after school. Apprentices study for up to four or five years before becoming masters. As craftsmen they are free from tax and bring in a good income.

Although trade is booming, its sustainability is questionable. Large black elm trees are becoming increasingly scarce and wood carvers have to travel further and further afield in search of wood. Also, changes in climate have led to warmer winters which means that more wood worm are surviving winters and are a much bigger problem than in the past. However, for the time being, the sound of sawing and chiseling can still be heard throughout the Ichan Kala.