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The tropical wetland legume, Sesbania rostrata Brem. forms N2-fixing nodules along its stem and on its roots after infection by Azorhizobium caulinodans. The N2-fixing tissue is surrounded by a cortex of uninfected cells which, in the stem nodules (but not the root nodules), contain chloroplasts. The photosynthetic competence of these chloroplasts was assessed through a novel technique involving image analysis of chlorophyll a fluorescence. Calculation of the quantum efficiency of photosystem II (PS II) photochemistry from these images indicated that most of the chloroplasts with potential for non-cyclic photosynthetic electron transport were concentrated within the mid- and inner-cortex, close to the edge of the N2-fixing tissue. PS II activity in the cortical cells was confirmed in vivo using O2-specific microelectrodes which showed that the concentration of O2 (pO2) in the outer cortex could rise from less than 1% up to 23.4% upon increased irradiance of the nodule, but that the pO2 of the inner cortex and infected tissue remained less than 0.0025%. Nitrogenase activity of stem nodules, as measured using a flow-through acetylene reduction assay (no H2 evolution was evident), showed a reversible increase of 28% upon exposure of the nodules to supplemental light. This increase resembled that obtained with stem nodules upon their exposure to an external pO2 of 40%.