Although crown wetting events can increase plant water status, leaf wetting is thought to negatively affect plant carbon balance by depressing photosynthesis and growth. We investigated the influence of crown fog interception on the water and carbon relations of juvenile and mature Sequoia sempervirens trees. Field observations of mature trees indicated that fog interception increased leaf water potential above that of leaves sheltered from fog. Furthermore, observed increases in leaf water potential exceeded the maximum water potential predicted if soil water was the only available water source. Because field observations were limited to two mature trees, we conducted a greenhouse experiment to investigate how fog interception influences plant water status and photosynthesis. Pre-dawn and midday branchlet water potential, leaf gas exchange and chlorophyll fluorescence were measured on S. sempervirens saplings exposed to increasing soil water deficit, with and without overnight canopy fog interception. Sapling fog interception increased leaf water potential and photosynthesis above the control and soil water deficit treatments despite similar dark-acclimated leaf chlorophyll fluorescence. The field observations and greenhouse experiment show that fog interception represents an overlooked flux into the soil–plant–atmosphere continuum that temporarily, but significantly, decouples leaf-level water and carbon relations from soil water availability.