A pellet stove utilizing gravity feed and natural draft more effectively and efficiently burns pellet fuel while producing less air pollution and ash. In one embodiment, the pellet stove has a primary combustion area comprising a burn unit removably disposed in the vent tube, a feed tube defining a fuel chamber above the burn unit and a secondary combustion area, comprising a burn box defining a secondary burn chamber, below the burn unit. The burn unit has a removable receptacle which defines a primary burn chamber that receives pellet fuel from the fuel chamber and discharges substantially burned fuel to the secondary burn chamber for additional burning. Openings in the burn box, pellet receptacle and vent tube draw air into the burn chambers. A control mechanism controls the air flow to regulate the heat generated by the pellet stove. The pellet stove can be manufactured in various aesthetically pleasing designs.