The contribution of stem water storage to the water balance of the arborescent palm, Sabal palmetto, was investigated using greenhouse studies, field measurements and a tree-cutting experiment. Water balance studies of greenhouse trees (1.5 to 3 m tall) were conducted in which transpiration was measured by weight loss, and changes in soil and stem water content by time-domain reflectometry. When the greenhouse plants were well-watered (soil moisture near saturation), water was withdrawn from the stem during periods of high transpiration and then replenished during the night so that the net transpirational water loss came primarily from the soil. As water was withheld, however, an increasing percentage of daily net transpirational water loss came from water stored in the stem. However, studies on palms growing in their natural environment indicated that during periods of high transpiration leaf water status was somewhat uncoupled from stem water stores. In a tree-cutting experiment, the maintenance of high relative water content of attached leaves was significantly correlated with stem volume/leaf area. Leaves of a 3-m tree remained green and fully hydrated for approximately 100d after it had been cut down, whereas those of a 1-m-tall plant turned brown within one week. The significance of stem water storage may be in buffering stem xylem potentials during periods of high transpiration and in contributing to leaf survival during extended period of low soil water availability.