A pellet stove includes a hopper for storing pellets, a basket for receiving the pellets by gravity, a duct for conveying combustion air to the basket, and a conduit for conducting heated air away from the basket. The position of the basket is adjustable, such as by raising and lowering it, or by rotating it, so as to control the number of pellets in the area of most intense combustion. One or more burn plates, positioned below the basket, provide platforms on which pellets falling through the basket can burn down to a smaller size. The pellet stove requires no external source of power. The stove so constructed enables quiet, efficient and clean burning of the pellets.