A permanent wood foundation wall which includes a frame having a first member, a second member spaced apart from the first member, and two side members. The first member, second member, and two side members each have a front surface and a rear surface that form the front frame surface and the rear frame surface. A cavity is formed between the front frame surface and the rear frame surface of the frame and the first member, second member, and two side members are formed from a wood material including a preservative. Further, the permanent wood foundation wall includes a sheathing board having a first side attached to the rear frame surface of the frame and a second side opposite the first side, a waterproofing membrane applied to the second side of the sheathing board, and a foam layer formed within the cavity of the frame.