Hydrilla verticillata (L.f.) Royle exhibits an inducible C4-type photosynthetic cycle, but lacks Kranz anatomy. Leaves in the C4-type state (but not C3-type) contained up to 5-fold higher internal dissolved inorganic carbon (DIC) concentrations than the medium, indicating that they possessed a CO2-concentrating mechanism (CCM). Several lines of evidence indicated that the chloroplast was the likely site of CO2 generation. From C4-type leaf [DIC] measurements, the estimated chloroplastic free [CO2] was 400 mmol m−3. This gave a calculated 2% O2 inhibition of photosynthesis, which was identical to the measured value, and provided independent evidence that the estimated [CO2] was close to the true value. A homogeneous distribution of DIC in the C4-type leaf could not account for such a high [CO2], or the resultant low O2 inhibition. For C3-type leaves the estimated chloroplastic [CO2] was only 7 mmol m−3, which gave high, and similar, calculated and measured O2 inhibition values of 22 and 26%, respectively. The CCM did not appear to be located at the plasma membrane, as it operated at low and high pH, indicating that it was independent of use of HCO3− from the medium. Also, both C3− and C4-type Hydrilla leaves showed pH polarity in the light, with abaxial and adaxial boundary layer values of about pH 4·0 and 10·5, respectively. Thus, pH polarity was not a direct component of the CCM, though it probably improved access to HCO3. Additionally, iodoacetamide and methyl viologen greatly reduced abaxial acidification, but not the steady-state CCM. Inhibitor studies suggested that the CCM required photosynthetically generated ATP, but Calvin cycle activity was not essential. Both leaf types accumulated DIC in the dark by an ATP-requiring process, possibly respiration, and C4-type leaves fixed CO2 at 11·8% of the light rate. The operation of a CCM to minimize photorespiration, and the ability to recapture respiratory CO2 at night, would conserve DIC in a densely vegetated lake environment where daytime [CO2] is severely limiting, while [O2] and temperatures are high.