Dwarf mistletoe (Arceuthobium spp.) is a hemiparasite that is said to be the single-most destructive pathogen of commercially valuable coniferous trees in many regions of the world. Although its destructive nature is well documented in many respects, its effects on the physiology of its host are poorly understood. In the present study, water and carbon relations were characterized over a range of scale from leaf to whole tree in large (40- to 50-m-tall) individuals of western hemlock (Tsuga heterophylla (Raf.) Sarg.) that were either heavily infected, or uninfected with hemlock dwarf mistletoe (Arceuthobium tsugense). Specific hydraulic conductivity (ks) of infected branches was approximately half that of uninfected branches, yet leaf-specific conductivity (kL) was similar because leaf area : sapwood area ratios (AL : AS) of infected branches were lower. Pre-dawn and minimum leaf water potential and stomatal conductance (gs) were similar among infected and uninfected trees because adjustments in hydraulic architecture of infected trees maintained kL despite reduced ks. Maximum whole-tree water use was substantially lower in infected trees (approximately 55 kg d−1) than in uninfected trees (approximately 90 kg d−1) because reduced numbers of live branches in infected trees reduced whole-tree AL : AS in a manner consistent with that observed in infected branches. Maximum photosynthetic rates of heavily infected trees were approximately half those of uninfected trees. Correspondingly, leaf nitrogen content was 35% lower in infected trees. Foliar δ13C values were 2.8‰ more negative in infected than in uninfected individuals, consistent with the absence of stomatal adjustment to diminished photosynthetic capacity. Adjustments in hydraulic architecture of infected trees thus contributed to homeostasis of water transport efficiency and transpiration on a leaf area basis, whereas both carbon accumulation and photosynthetic water use efficiency were sharply reduced at both the leaf and whole-tree scale.