We evaluated the osmotic adjustment capacity of leaves and roots of young olive (Olea europaea L.) trees during a period of water deficit and subsequent rewatering. The trials were carried out in Basilicata (40 degrees 24' N, 16 degrees 48' E) on 2-year-old self-rooted olive plants (cv. 'Coratina'). Plants were subjected to one of four drought treatments. After 13 days of drought, plants reached mean predawn leaf water potentials of -0.45 +/- 0.015 MPa (control), -1.65 +/- 0.021 (low stress), -3.25 +/- 0.035 (medium stress) and -5.35 +/- 0.027 MPa (high stress). Total osmotic adjustment increased with increasing severity of drought stress. Trees in the high stress treatment showed total osmotic adjustments ranging between 2.4 MPa at 0500 h and 3.8 MPa at 1800 h on the last day of the drought period. Osmotic adjustment allowed the leaves to reach leaf water potentials of about -7.0 MPa. Active osmotic adjustment at predawn decreased during the rewatering period in both leaves and roots. Stomatal conductance and net photosynthetic rate declined with increasing drought stress. Osmotic adjustment in olive trees was associated with active and passive osmotic regulation of drought tolerance, providing an important mechanism for avoiding water loss.