The ability of plants to maintain water flow through leaves under water stress-induced tension (assessed as the leaf hydraulic vulnerability; P50(leaf)) is intimately linked with survival. We examined the significance of P50(leaf) as an adaptive trait in influencing the dry-end distributional limits of cool temperate woody angiosperm species. We also examined differences in within-site variability in P50(leaf) between two high-rainfall montane rainforest sites in Tasmania and Peru, respectively. A significant relationship between P50(leaf) and the 5th percentile of mean annual rainfall across each species distribution was found in Tasmania, suggesting that P50(leaf) influences species climatic limits. Furthermore, a strong correlation between P50(leaf) and the minimum rainfall availability was found using five phylogenetically independent species pairs in wet and dry evergreen tree species, suggesting that rainfall is an important selective agent in the evolution of leaf hydraulic vulnerability. Greater within-site variability in P50(leaf) was found among dominant montane rainforest species in Tasmania than in Peru and this result is discussed within the context of differences in spatial and temporal environmental heterogeneity and parochial historical ecology.