The amount of water stored in the stem introduces uncertainty when estimating diurnal whole-tree transpiration (ET) and canopy stomatal conductance (GC) using sap flow measured at the base of the stem (Q). Thus, to examine how ET can be calculated from Q, we obtained ET using sap flow and stem water content measurements and a whole-tree water balance equation, and compared it with Q. In this study, we measured sap flows in 33-year-old individual trees of Cryptomeria japonica D. Don and Chamaecyparis obtusa Endl. using constant-heat sap flow probes. Sap flows were measured at several depths at the base of the stem, and at the upper trunk as a surrogate of ET. Stem water contents were measured at three vertical positions on the trunk using amplitude-domain reflectometry (ADR) sensors. We also measured sapwood volumes of the study trees. Using simultaneous sap flow and stem water content measurements along the tree stem, we confirmed that stem water storage has impacts on the transpiration stream. These include sap flow lags along the tree heights and an enhanced peak of transpiration from stem sap flow. These results enabled us to calculate the correct ET by multiplying Q by 1·18 and shifting its time series forward by 30 min. The ET value was then used to calculate GC for both tree species. The factor of 1·18 is based on the fact that at noon, the value of ET was higher than that of Q, due to the prolonged Q during the evening. Establishing the time lag was relatively simple and was determined by comparing Q and vapor pressure deficit. The multiplier is more challenging to ascertain due to the difficulty in obtaining ET correctly. Copyright © 2009 John Wiley & Sons, Ltd.