Stomatal regulation of transpiration constrains leaf water potential (Psi(L)) within species-specific ranges that presumably avoid excessive tension and embolism in the stem xylem upstream. However, the hydraulic resistance of leaves can be highly variable over short time scales, uncoupling tension in the xylem of leaves from that in the stems to which they are attached. We evaluated a suite of leaf and stem functional traits governing water relations in individuals of 11 lowland tropical forest tree species to determine the manner in which the traits were coordinated with stem xylem vulnerability to embolism. Stomatal regulation of Psi(L) was associated with minimum values of water potential in branches (Psi(br)) whose functional significance was similar across species. Minimum values of Psi(br) coincided with the bulk sapwood tissue osmotic potential at zero turgor derived from pressure-volume curves and with the transition from a linear to exponential increase in xylem embolism with increasing sapwood water deficits. Branch xylem pressure corresponding to 50% loss of hydraulic conductivity (P (50)) declined linearly with daily minimum Psi(br) in a manner that caused the difference between Psi(br) and P (50) to increase from 0.4 MPa in the species with the least negative Psi(br) to 1.2 MPa in the species with the most negative Psi(br). Both branch P (50) and minimum Psi(br) increased linearly with sapwood capacitance (C) such that the difference between Psi(br) and P (50), an estimate of the safety margin for avoiding runaway embolism, decreased with increasing sapwood C. The results implied a trade-off between maximizing water transport and minimizing the risk of xylem embolism, suggesting a prominent role for the buffering effect of C in preserving the integrity of xylem water transport. At the whole-tree level, discharge and recharge of internal C appeared to generate variations in apparent leaf-specific conductance to which stomata respond dynamically.