Increases in photosynthetic capacity (A1500) after defoliation have been attributed to changes in leaf-level biochemistry, water, and/or nutrient status. The hypothesis that transient photosynthetic responses to partial defoliation are regulated by whole-plant (e.g. source-sink relationships or changes in hydraulic conductance) rather than leaf-level mechanisms is tested here. Temporal variation in leaf-level gas exchange, chemistry, whole-plant soil-to-leaf hydraulic conductance (KP), and aboveground biomass partitioning were determined to evaluate mechanisms responsible for increases in A1500 of Eucalyptus globulus L. potted saplings. A1500 increased in response to debudding (B), partial defoliation (D), and combined B&D treatments by up to 36% at 5 weeks after treatment. Changes in leaf-level factors partly explained increases in A1500 of B and B&D treatments but not for D treatment. By week 5, saplings in B, B&D, and D treatments had similar leaf-specific KP to control trees by maintaining lower midday water potentials and higher transpiration rate per leaf area. Whole-plant source:sink ratios correlated strongly with A1500. Further, unlike KP, temporal changes in source:sink ratios tracked well with those observed for A1500. The results indicate that increases in A1500 after partial defoliation treatments were largely driven by an increased demand for assimilate by developing sinks rather than improvements in whole-plant water relations and changes in leaf-level factors. Three carbohydrates, galactional, stachyose, and, to a lesser extent, raffinose, correlated strongly with photosynthetic capacity, indicating that these sugars may function as signalling molecules in the regulation of longer term defoliation-induced gas exchange responses.