Higher water use efficiency (WUE) in C4 plants may allow for greater xylem safety because transpiration rates are reduced. To evaluate this hypothesis, stem hydraulics and anatomy were compared in 16 C3, C3–C4 intermediate, C4-like and C4 species in the genus Flaveria. The C3 species had the highest leaf-specific conductivity (KL) compared with intermediate and C4 species, with the perennial C4 and C4-like species having the lowest KL values. Xylem-specific conductivity (KS) was generally highest in the C3 species and lower in intermediate and C4 species. Xylem vessels were shorter, narrower and more frequent in C3–C4 intermediate, C4-like and C4 species compared with C3 species. WUE values were approximately double in the C4-like and C4 species relative to the C3–C4 and C3 species. C4-like photosynthesis arose independently at least twice in Flaveria, and the trends in WUE and KL were consistent in both lineages. These correlated changes in WUE and KL indicate WUE increase promoted KL decline during C4 evolution; however, any involvement of WUE comes late in the evolutionary sequence. C3–C4 species exhibited reduced KL but little change in WUE compared to C3 species, indicating that some reduction in hydraulic efficiency preceded increases in WUE.