This field study examined the ecophysiological responses of three tree species to salinity in the Austin Bay Nature Reserve, adjacent to the Peel-Harvey Estuary in Western Australia (115°46′ E 32°37′ S). The area is at increased risk of flooding with saline water during storm surges due to the construction of a channel between the estuary and Indian Ocean in 1994. Banksia attenuata R.Br. occurs on small sandy ridges adjacent to a seasonal wetland, while Melaleuca cuticularis Labill. and Casuarina obesa Miq. occur in a seasonally flooded wetland. Landscape position determined exposure to salinity, with M. cuticularis and C. obesa experiencing high soil and groundwater salinity during summer (electrical conductivity, EC, up to 70 dS m−1) while B. attenuata was not exposed to soil or groundwater with EC greater than 20 dS m−1. B. attenuata had relatively stable leaf water status throughout the year and did not osmotically adjust as root-zone salinity increased. By contrast, M. cuticularis and C. obesa had large variation in stem water potential and exhibited osmotic adjustment during summer. Whereas the sap flow rates of M. cuticularis and C. obesa remained high throughout the year, sap flow of B. attenuata decreased during summer which may have limited uptake of salt. The three species also exhibited differences in traits associated with tissue-level salt tolerance, as M. cuticularis and C. obesa produced compatible organic solutes (methyl proline in M. cuticularis and proline in C. obesa), whereas B. attenuata did not. The distributions of these species within the Austin Bay Nature Reserve are determined in part by their tolerance to salinity, which will influence their responses to hydrological disturbance.