As soil and plant water status decline, decreases in hydraulic conductance can limit a plant’s ability to maintain gas exchange. We investigated hydraulic limitations for Artemisia tridentata during summer drought. Water use was quantified by measurements of soil and plant water potential (Ψ), transpiration and leaf area. Hydraulic transport capacity was quantified by vulnerability to water stress-induced cavitation for root and stem xylem, and moisture release characteristics for soil. These data were used to predict the maximum possible steady-state transpiration rate (Ecrit) and minimum leaf xylem pressure (Ψcrit). Transpiration and leaf area declined by ~ 80 and 50%, respectively, as soil Ψ decreased to –2·6 MPa during drought. Leaf-specific hydraulic conductance also decreased by 70%, with most of the decline predicted in the rhizosphere and root system. Root conductance was projected to be the most limiting, decreasing to zero to cause hydraulic failure if Ecrit was exceeded. The basis for this prediction was that roots were more vulnerable to xylem cavitation than stems (99% cavitation at –4·0 versus –7·8 MPa, respectively). The decline in water use during drought was necessary to maintain E and Ψ within the limits defined by Ecrit and Ψcrit.