The effect of the pathogen Phytophthora austrocedrae on tree physiology of Austrocedrus chilensis in Patagonia was studied in a 4-week study. In the first week, stem-inoculated saplings showed a significant decrease in photosynthesis (A) without alteration of stomatal conductance (gs) or stem-specific hydraulic conductivity (Ks). From the second week on, progressive decreases in A, gs and Ks were observed, concomitantly with development of significant stem lesions. Water use efficiency (WUE) increased in the second week and declined progressively from the third week. Hyphae and resinous materials were observed in tracheids and rays below lesions. Necrosis of parenchyma ray cells and blockage of tracheids torus were observed. Healthy xylem showed no resinous materials or tracheid blockage, but abundant starch in rays, which was absent in altered xylem. The culture filtrate (CF) of the pathogen was shown to induce changes in extracellular pH and conductivity, and increased necrosis in tissues of leaves and stem challenged with CF in vitro. Similar results were obtained in leaf tissues of the inoculated saplings in vivo. CF injection into xylem of saplings induced a decline in A and disturbance of leaf tissue integrity, without altering gs, WUE or Ks. The decrease of A correlated with changes in tissue integrity. A possible mechanism of A. chilensis decline induced by P. austrocedrae is discussed.