Needle morphological, chemical and physiological characteristics of Norway spruce were studied in a forest chronosequence in Järvselja Experimental Forest, Estonia. Current-year shoots were sampled from upper canopy positions in five stands, ranging in height from 1.8 to 33.0 m (corresponding age range was 10–85 years). A/Ci curves were determined to obtain maximum carboxylation rates (Vcmax) and maximum rates of electron transport (Jmax). Needle nitrogen (N) partitioning into photosynthetic functions was calculated from the values of Vcmax, Jmax and leaf chlorophyll concentration. All needle size parameters (length, width, thickness, volume and cross-sectional areas of mesophyll and xylem) increased significantly with tree height. The needles of taller trees had lower mass-based N and chlorophyll concentrations (21% and 43% difference between shortest and tallest stands, respectively), but higher dry mass per area (35%), dry mass per volume (18%), number of cells per mesophyll cross-section area (40%) and partitioning of N into non-photosynthetic functions (12%). Light saturated net assimilation rate, Vcmax, Jmax and stomatal conductance decreased with tree age (35%, 16%, 12% and 29% difference, respectively). A path analysis model describing tree age-related reduction of photosynthetic capacity as a result of sink limitation provided the best fit to our data. However, since the path model corresponding to source limitation, where photosynthetic reduction derives from changes in needle structure and chemistry was not rejected, we conclude that the decline in photosynthesis with tree age results from several mechanisms (limited sink strength, stomatal and N limitation) operating simultaneously and sequentially.