This review focuses on the effects of water deficits on photosynthesis and partitioning of assimilates at the leaf level. It is now established that the rate of CO2 assimilation in the leaves is depressed at moderate water deficits, mostly as a consequence of stomatal closure. In fact, depending on the species and on the nature of dehydration, carbon assimilation may diminish to values close to zero without any significant decline in mesophyll photosynthetic capacity. This remarkable resistance of the photosynthetic apparatus to water deficits became apparent after the measurement of photosynthesis at saturating CO2 concentrations was made possible. Whenever light or heat stress are superimposed a decline in mesophyll photosynthesis may occur as a result of a ‘down-regulation’ process, which seems to vary among genotypes. A major secondary effect of dehydration on photosynthetic carbon metabolism is the change in partitioning of recently fixed carbon towards sucrose, which occurs in a number of species in parallel to the increase in starch breakdown. This increase in compounds of low molecular weight may contribute to an osmotic adjustment. Controlling mechanisms involved in this process deserve further investigation.