Wolves are neutral and hostile in Minecraft there appearance is based of the wild 'arctic wolf'. All wolves spawn neutral naturally they will spawn in Forest, Birch Forest and Cold Taiga biomes also in there mountanious versions. Like most mobs wolves are vulnerable to suffocating, drowning and fall damage. Wolves can be tamed with bones. To tame a wolf you must right-click it with a bone. A wolf may take up to 7 bones to be tamed.
Once a wolf is tamed, it will not attack the person who tamed it, and they can right-click on it to make it sit or follow the player. When a tamed wolf is sitting it will stay there unless the player is attacked, otherwise it will stay close to the player pretty much anywhere. Tamed wolves will also attack any mob or player that the player attacks or is attacked by. As of the Minecraft Pretty Scary Update, you can change the color of your wolves' collars by dying them. Wolves when standing will teleport to the player if they get to distant together, Ocelots/Cats do the same thing.
Neutral wolves will attack sheep leaving behind a block of wool the colour of the attcked sheep but no xp orbs. Tames wolves will not attack sheep or any other mob unless told to.
If you attack a wild wolf, it will turn hostile and attack you, as well as other wolves in a 18 block radius. Hostile wolves cannot be tamed. You can tell that a wolf is hostile when its eyes turn red and the grey contrast of the wolf turns dark. Wolves can be bred as a update 1.1 by feeding two adult wolves any type of meat, whether it is raw or cooked. Wolves cannot be bred while sitting.