Rubber tree (Hevea brasiliensis Müll. Arg.) radial growth dynamics were monitored with displacement sensors, together with latex production, to investigate three aspects of the dual production of latex and wood: (1) the usefulness of fine-scale dendrometric measurements as a physiological tool to detect water shortage through radial growth; (2) the dynamic aspects, both at the seasonal and at the multi-year scale, of the competition between latex and wood production; and (3) the spatial distribution of radial growth rates around the tapping cut. Radial growth of untapped control trees started with the onset of the rainy season and lasted until the onset of the dry season, ceasing completely during the driest period. Displacement sensors provided a sensitive means of detecting water shortage, with a clear correlation between diameter variations and changes in water availability (both daily evapotranspiration and monthly rainfall) over the whole annual cycle. However, the correlation was significantly disturbed in tapped trees. After resumption of tapping, the radial growth rate dropped sharply within two weeks and the effect persisted throughout the whole season, so that the cumulative growth of tapped trees was about half that of untapped trees, with the cumulative growth deficit reaching 80% for the period from mid-June to November. This long-known negative impact of tapping on growth was much stronger in the second year of tapping than in the first, whereas latex production increased significantly between the first and second year of tapping. The increased latex production, which could not be ascribed to climatic conditions, shows that the establishment of an artificial latex sink is a progressive, long-term process likely involving many aspects of metabolism. As expected, ethylene significantly increased latex production in both years; however, ethylene had no effect on the growth rates of tapped trees. Radial growth was differentially affected at different locations around the tapping cut, with growth rates significantly lower in the tapped panel than in the untapped panel, and higher above the cut than below the cut. Thus, caution is needed when deriving whole stem wood production from girth measurements at one location on the stem, especially from girth measurements made close to the tapping cut. This also provides new evidence for the location of the latex regeneration area in the tapped panel, below the cut.