In the context of an increased risk of extreme drought events across Europe during the next decades, the capacity of trees to recover and survive drought periods awaits further attention. In summer 2005, 4-year-old beech (Fagus sylvatica L.) saplings were watered regularly or were kept for 4 weeks without irrigation in the field and then re-watered again. Changes of plant water status, leaf gas exchange and Chl a fluorescence parameters, as well as alterations in leaf pigment composition were followed. During the drought period, stomatal conductance (gs) and net photosynthesis (Pn) decreased in parallel with increased water deficit. After 14 days without irrigation, stomata remained closed and Pn was almost completely inhibited. Reversible downregulation of PSII photochemistry [the maximum quantum efficiency of PSII (Fv/Fm)], enhanced thermal dissipation of excess excitation energy and an increased ratio of xanthophyll cycle pigments to chlorophylls (because of a loss of chlorophylls) contributed to an enhanced photo-protection in severely stressed plants. Leaf water potential was restored immediately after re-watering, while gs, Pn and Fv/Fm recovered only partially during the initial phase, even when high external CO2 concentrations were applied during the measurements, indicating lasting non-stomatal limitations. Thereafter, Pn recovered completely within 4 weeks, meanwhile gs remained permanently lower in stressed than in control plants, leading to an increased ‘intrinsic water use efficiency’ (Pn/gs). In conclusion, although severe drought stress adversely affected photosynthetic performance of F. sylvatica (a rather drought-sensitive species), Pn was completely restored after re-watering, presumably because of physiological and morphological adjustments (e.g. stomatal occlusions).