A cellulose fiber insulation, a manufacturing method and a plant for practicing the method. Waste paper is pulverized in a hammermill apparatus to provide a quantity of cellulose fiber particles which are air conveyed past a fog-type injection nozzle where the particles are wetted with a solution of fire and/or pest resistant and corrosion inhibiting chemicals. The wetted particles are thereafter air conveyed away from the nozzle with heated exhaust air from the hammermill apparatus to dry the particles prior to depositing them in a storage bin. The air by which the particles are conveyed may be exhausted through a filter to catch residual particles which may be returned to the storage bin or directly to the process. The sprayed solution may be prepared by a batch process or by counterflow percolation of heated liquid upward through a bed of soluble fire-retardant chemical. The concentration of chemical in the resultant saturated solution may be regulated by a thermostatic control system. The weight ratio of solution to cellulose fiber may be controlled by sensing the flow rate of the cellulose fiber and generating signals to regulate the rate at which the solution is sprayed from the nozzle.