Heavenwood is a forest in King Ethelred's kingdom which appears in The Tournament of the Phantom Knight and The Tale of Dirk's New Sword. It is inhabited by dwarf-like creatures who make use of the special wood from the oldest tree in the forest.

Dirk the Daring, Daphne and Timothy passed through the forest on their way to the Phantom Knight's castle and were helped by its dwellers.

Later, the wood was invaded by Trolls from the Isle of Narg and took several of its dwellers hostages to build Lord Narg's war device. One day Sir Dirk fought three trolls but broke his sword in the process. Greybeard created a Heavenwood sword for him.