Abstract. Seedlings of Eucalyptus pauciflora Sieb. ex. Spreng. were stressed by withholding water. They were then rewatered, and the time course of recovery of photosynthesis was followed. Recovery always followed a distinct bi-phasic pattern. A first, rapid, stage of recovery commenced between 5 and 60 min after rewatering and was completed by between 30 min and four h after rewatering. Recovery in this stage always involved concurrent increases in stomatal conductance and the leaf's capacity to assimilate CO2 at any intercellular partial pressure of CO2 [A(pi) relationship]. This stage of rapid recovery was followed either by a constant or gradually declining rate of photosynthesis for the remainder of the light period. In plants kept to a normal diurnal cycle, a second stage of recovery occurred and was completed during the night following rewatering. In this second stage of recovery, the A(Pi) relationship recovered to 90–100% of prestress values. In contrast, the recovery of stomatal conductance was not complete by the first day after rewatering. In darkness, complete recovery of the A(pi) relationship required as little as five h. If plants were kept in continuous high light, then between six and 16 h elapsed after rewatering before the second stage of recovery commenced. After this lag, almost complete recovery of the A(pi) relationship was possible. These results indicate that water stress has two independent and parallel effects on the mesophyll capacity for photosynthesis. The first may be simply reversible when the plant is rewatered, while the second may involve damage to the photosynthetic machinery that requires protein synthesis for its reversal.