The water relations of three native and four exotic shrub species occurring in semi-arid Central Otago, New Zealand were examined. Water potentials at midday were low in the native Kunzea ericoides, while those in the exotic Lupinus arboreus remained high, but there were no other obvious distinctions between the field water potentials of the native and exotic species. An examination of the relation between water potential and water content, however, showed a low potential at full turgor in the native Coprosma propinqua, while the exotic species Rosa rubiginosa and L. arboreus both showed large changes in water potential for relatively small changes in water content after turgor had been lost. The exotics R. rubiginosa and Thymus vulgaris showed a rapid loss of water content in drying conditions; the exotic ‘broom’Cytisus scoparius and the native ‘broom’Carmichaelia compacta showed the lowest rates. It is concluded that there is no overall difference between the mechanism of adaptation of the native and exotic species; the exotic species that invaded are those that were pre-adapted to the conditions.