The purpose of this study was to determine how shading affects the hydraulic and wood-anatomical characteristics of four boreal conifers (Pinus banksiana, Pinus contorta, Picea glauca and Picea mariana) that differ in shade tolerance. Plants were grown in an open field and under a deciduous-dominated overstory for 6 years. Sapwood- and leaf-area specific conductivity, vulnerability curves, and anatomical measurements (light and scanning electron microscopy) were made on leading shoots from six to nine trees of each treatment combination. There was no difference in sapwood-area specific conductivity between open-grown and understory conifers, although two of four species had larger tracheid diameters in the open. Shaded conifers appeared to compensate for small diameter tracheids by changes in pit membrane structure. Scanning electron microscopy revealed that understory conifers had thinner margo strands, greater maximum pore size in the margo, and more torus extensions. All of these trends may contribute to inadequate sealing of the torus. This is supported by the fact that all species showed increased vulnerability to cavitation when grown in the understory. Although evaporative demand in an understory environment is low, a rapid change into fully exposed conditions could be detrimental for shaded conifers.