Larrea tridentata is a xerophytic evergreen shrub, dominant in the arid regions of the southwestern United States. We examined relationships between gas-exchange characteristics, plant and soil water relations, and growth responses of large versus small shrubs of L. tridentata over the course of a summer growing season in the Chihuahuan Desert of southern New Mexico, USA. The soil wetting front did not reach 0.6 m, and soils at depth of 0.6 and 0.9 m remained dry throughout the summer, suggesting that L. tridentata extracts water largely from soil near the surface. Surface soil layers (<0.3 m) were drier under large plants, but pre-dawn xylem water potentials were similar for both plant sizes suggesting some access to deeper soil moisture reserves by large plants. Stem elongation rates were about 40% less in large, reproductively active shrubs than in small, repoductively inactive shrubs. Maximal net photosynthetic rates (Pmax) occurred in early summer (21.3 u mol m-2 s -1), when pre-dawn xylem water potential (XWP) reached ca. -1MPa. Although both shrub sizes exhibited similar responses to environmental factors, small shrubs recovered faster from short-term drought, when pre-dawn XWP reached about -4.5 MPa and Pmax decreased to only ca. 20% of unstressed levels. Gas exchange measurements yielded a strong relationship between stomatal conductance and photosynthesis, and the relationship between leaf-to-air vapor pressure deficit and stomatal conductance was found to be influenced by pre-dawn XWP. Our results indicate that stomatal repsonses to water stress and vapor pressure deficit are important in dtermining rates of carbon gain and water loss in L. tridentata.