A closed smoke generating apparatus isolated from the atmosphere is provided in which carrier gases from an associated closed air food processing system are introduced into a smoke collection chamber, mixed with smoke supplied from a separate distillation chamber mounted therebelow. Smoke and carrier gases are discharged through an outlet in the collection chamber directly into the closed air food processing system. Wood sawdust or other organic particulate materials are continuously fed into the elongated distillation chamber and are carried by a rotating auger. A heat source surrounds the distillation chamber for destructive distillation of the particulate materials without introduction of air into or leakage of air from the distillation chamber. A residue discharge is provided with means to seal the outlet end of the distillation chamber. Smoke ports or conduit means provide direct communication between the distillation chamber and the smoke collection chamber. Auxiliary heating means can be provided for the smoke conduit means to reduce deposition of distillation by-products. Further auxiliary heating means can be provided in the collection chamber to minimize deposition of unwanted distillation by-products and also to accelerate flow of smoke and carrier gases through the closed system. The arrangement of the smoke collection chamber directly above the smoke distillation chamber and substantially parallel therewith provides an efficient apparatus for mixing and supplying smoke with carrier gases into the closed air food processing system. The collection chamber can be of varying size or cross-sectional configuration without requiring a change in the construction of the lower distillation chamber. The collection chamber has a door providing access to the smoke port conduits and to the collection chamber itself for cleaning and maintenance. A layer of insulation substantially encloses the distillation chamber, and a separate insulation layer can surround the smoke collection chamber.