Xylem hydraulic conductivity and percentage loss of conductivity (PLC) were measured on a ring-porous (Fraxinus americana L., white ash), a diffuse porous (Acer rubrum L., red maple) and a coniferous (Picea rubens Sarg., red spruce) tree species in a temperate deciduous forest in central Massachusetts, USA. Measurements were made on current and 1-year-old branch segments in the afternoon and on the following morning. Afternoon PLC was 45 to 70% for the current year's extension growth in both white ash and red maple. Morning PLC was significantly lower (10–40%). Conductivity also varied diurnally suggesting, on average, a 50% recovery from cavitation overnight. Red spruce showed lower PLC and conductivity and a less pronounced night-time recovery. Diurnal variation in hydraulic conductivity and PLC suggests that embolism removal occurred in all three species despite the existence of tension within the xylem. Further evidence for embolism removal was observed with an in situ double-staining experiment in which dyes were fed to a transpiring branch during the late afternoon and the following morning. Examination of stem cross-sections showed that a larger number of vessels were conductive in the morning than on the preceding afternoon. Results of this study suggest that hydraulic capacity is highly dynamic and that conductivity measurements reflect a balance between two processes: cavitation and embolism removal.