In the Chihuahuan Desert of southern New Mexico, both water and nitrogen limit the primary productivity of Larrea tridentata, a xerophytic avergreen shrub. Net photosynthesis was positively correlated to leaf N, but only in plants that received supplemental water. Nutrient-use efficiency, defined as photosynthetic carbon gain per unit N invested in leaf tissue, declined with increasing leaf N. However, water-use efficiency, defined as the ratio of photosynthesis to transpiration, increased with increasing leaf N, and thus these two measure of resource-use efficiency were inversely correlated Resorption efficiency was not significantly altered over the nutrient gradient, nor was it affected by irriation treatments. Leaf longevity decreased significantly with fertilization although the absolute magnitude of this decrease was fairly small, in part due to a large background of insect-induced mortality. Age-specific gas exchange measurements support the hypothesis that leaf aging represents a redistribution of resources, rather than actual deterioration or declining resoruce-use efficiency.