Improved estimates of evapotranspiration (ET) are needed for water resource management and irrigation scheduling. We review the use of imaging spectroscopy to capture estimates of water vapour flux and biophysical components of ET. Remote sensing has long attempted to quantify and predict ET, with most applications relying only on green vegetation indexes from multispectral imagers combined with thermal radiance and weather data. In contrast, imaging spectrometry is an advanced remote sensing technology that measures hundreds of spectral bands in the solar spectrum. Plant pigments, water, and dry matter have unique spectral signatures that can advance estimates of ET and detection of drought stress. This allows analyses based on the physics of spectroscopy and avoids a requirement for continual empirical calibration. These spectral components provide unprecedented information about plant physiological processes, which improve understanding of the regulation of water fluxes and the energy budget. Laboratory, field, and airborne studies of spectral properties in the near- and shortwave-infrared region show strong relationships with plant water relations like water content, relative water content, and water potential. Because water absorption features are spectrally independent of pigment absorptions in the visible region, they provide a new source of information about environmental conditions. These new observations from imaging spectroscopy will lead to better understanding of ecological and hydrological processes. Copyright © 2011 John Wiley & Sons, Ltd.