Homeostatic maintenance of gas exchange optimizes carbon gain per water loss. Homeostasis is regulated by short-term physiological and long-term structural mechanisms, both of which may respond to changes in resource availability associated with competition. Therefore, stand density regulation via silvicultural manipulations may facilitate growth and survival through mechanisms operating at both short and long timescales. We investigated the responses of ponderosa pine (Pinus ponderosa) to stand basal area manipulations in Arizona, USA. Stand basal area was manipulated to seven replicated levels in 1962 and was maintained for four decades by decadal thinning. We measured basal area increment (BAI) to assess the response and sustainability of wood growth, carbon isotope discrimination (Δ) inferred from annual rings to assess the response of crown gas exchange, and ratios of leaf area to sapwood area (Al:As) to assess longer term structural acclimation. Basal area treatments increased soil water potential (r2 = 0.99) but did not affect photosynthetic capacity. BAI increased within two years of thinning, and the 40-year mean BAI was negatively correlated with stand basal area (r2 = 0.98). Δ was negatively correlated with stand basal area for years 5 through 12 after thinning (r2 = 0.90). However, Δ was relatively invariant with basal area for the period 13–40 years after initial thinning despite maintenance of treatment basal areas via repeated decadal thinnings. Independent gas exchange measurements verified that the ratio of photosynthesis to stomatal conductance was invariant with basal area, but absolute values of both were elevated at lower basal areas. Al:As was negatively correlated with basal area (r2 = 0.93). We hypothesize that increased Al:As is a homeostatic response to increased water availability that maximizes water-use efficiency and whole-tree carbon uptake. Elevated Al:As of trees at low basal areas was associated with greater resilience to climate, i.e., greater absolute BAI during drought; however, trees with high Al:As in low basal area stands also exhibited the greatest sensitivity to drought, i.e., greater relative decline in BAI.