The vascular cambium is a layer of tissue in plants that plays a crucial role in secondary growth. It is located between the xylem and phloem in the stems and roots of woody plants. This meristematic tissue produces new cells, allowing the plant to increase in diameter over time. As the vascular cambium divides, it generates new xylem cells toward the inside and new phloem cells toward the outside. This process contributes to the formation of annual growth rings, which can be observed in tree trunks. The vascular cambium is essential for the plant's ability to transport water, nutrients, and sugars efficiently.