The capacity of forests to mitigate global climate change can be negatively influenced by tropospheric ozone that impairs both photosynthesis and stomatal control of plant transpiration, thus affecting ecosystem productivity and watershed hydrology. We have evaluated individual and interactive effects of ozone and climate on late season streamflow for six forested watersheds (38–970 000 ha) located in the Southeastern United States. Models were based on 18–26 year data records for each watershed and involved multivariate analysis of interannual variability of late season streamflow in response to physical and chemical climate during the growing season. In all cases, some combination of ozone variables significantly improved model performance over climate-only models. Effects of ozone and ozone × climate interactions were also consistently negative and were proportional to variations in actual ozone exposures, both spatially across the region and over time. Conservative estimates of the influence of ozone on the variability (R2) of observed flow ranged from 7% in the area of lowest ozone exposure in West Virginia to 23% in the areas of highest exposure in Tennessee. Our results are supported by a controlled field study using free-air concentration enrichment methodology which indicated progressive ozone-induced loss of stomatal control over tree transpiration during the summer in mixed aspen-birch stands. Despite the frequent assumption that ozone reduces tree water loss, our findings support increasing evidence that ozone at near ambient concentrations can reduce stomatal control of leaf transpiration, and increase water use. Increases in evapotranspiration and associated streamflow reductions in response to ambient ozone exposures are expected to episodically increase the frequency and severity of drought and affect flow-dependent aquatic biota in forested watersheds. Regional and global models of hydrologic cycles and related ecosystem functions should consider potential interactions of ozone with climate under both current and future warmer and ozone-enriched climatic conditions.