Responses of CO2 assimilation and stomatal conductance to decreasing leaf water potential, and to environmental factors, were analysed in a mixed natural stand of sessile oak (Quercus petraea ssp. medwediewii) and beech (Fagus svlvatica L.) in Greece during the exceptionally dry summer of 1998. Seasonal courses of leaf water potential were similar for both species, whereas mean net photosynthesis and stomatal conductance were always higher in sessile oak than in beech. The relationship between net photosynthesis and stomatal conductance was strong for both species. Sessile oak had high rates of photosynthesis even under very low leaf water potentials and high air temperatures, whereas the photosynthetic rate of beech decreased at low water potentials. Diurnal patterns were similar in both species but sessile oak had higher rates of CO2 assimilation than beech. Our results indicate that sessile oak is more tolerant of drought than beech, due, in part, to its maintenance of photosynthesis at low water potential.