A new approach was used to experimentally dry and warm a Mediterranean shrubland. By means of automatically sliding curtains, the drought period was extended by excluding rain over the two growing seasons (spring and autumn), and passive warming was created by avoiding infra-red dissipation at night over the whole year. The aim of the study was to test how a future extended drought period and an increase in temperatures could affect the photosynthetic and water use strategies of two co-occurring Mediterranean shrubs, Erica multiflora and Globularia alypum, which are common species of the dry coastal shrublands. The shoot water potential, leaf gas exchange rates and chlorophyll a fluorescence of plants was monitored seasonally during two years (1999–2001). In addition we measured the photosynthetic response curves to light and CO2 in autumn 2001 and the foliar N concentration and leaf C and N stable isotopes in summer 1999 and 2000. Droughted plants of both shrub species showed lower shoot water potentials, transpiration rates and stomatal conductances than control plants, although there was a high seasonal variability. Drought treatment reduced significantly the overall leaf net photosynthetic rates of E. multiflora, but not of G. alypum. Droughted plants of E. multiflora also showed lower leaf net photosynthetic rates in response to light and CO2 and lower carboxylation efficiency than controls, but there was no significant effect of drought on its overall photosystem II (PSII) photochemical efficiency. Although warming treatment did not affect the leaf net photosynthetic rates of the two species overall the study, it increased significantly the carboxylation efficiency and leaf net photosynthetic rates of G. alypum plants in response to CO2 levels in autumn 2001. In addition, warming treatment increased the potential photochemical efficiency of PSII (Fv/Fm) of both species (but especially of G. alypum) at predawn or midday and mainly in autumn and winter. Thus, the results suggest that drier conditions might decrease the annual productivity of these Mediterranean shrubs, particularly of E. multiflora, and that future warming could alleviate the present low temperature constraints of the photosynthetic performance of the two studied species, but especially of G. alypum, during the colder seasons. Ultimately, drier and warmer conditions in the near future may change the competitive relationship among these species in such Mediterranean ecosystems.