This study addresses the application of compressed wood (CW) made of Japanese cedar, as a substitute for high-density hardwood, to shear dowel. A double wood-to-wood shear test was performed to evaluate the mechanical shear properties of CW perpendicular to the grain, and the results were compared with those of several types of dowel material. CW with its annual ring radial to loading direction (0°) had a unique double shear performance characteristic, and showed good properties as a dowel material by virtue of its strength and rich ductility. In contrast, CW with its annual ring tangential to loading direction (90°) and maple exhibited brittle failure. While thickness of the base member was varied, the ductility of the joint became stable for diameter over 36 mm and 24 mm thickness for the main and side members, respectively. When the density of the base member increased, its stiffness, yield load, and maximum load exhibited proportional improvement with different inclinations; however, in the case of a maple dowel, the increases were small. When the density of the base member was increased, the ultimate load had positive linear tendency, whereas plastic modulus decreased. Consequently, almost constant energy absorption was observed in spite of the increased density. The optimum load-carrying capacity and ductility of a compressed wooden dowel joint could be designed by introducing an appropriate base member.