The effect of CO2 increase on gas exchange and water-use effíciency (WUE) in three temperate deciduous species (Fagus crenata, Ginkgo biloba and Alnus firma) under gradually-developing drought-stress was assessed. Seedlings were grown within transparent open-top cabinets and maintained for 4 monťhs at mean CO2 concentrations of either 350 (ambient; C350) or 700 pmol moT’ (elevated; C700) and combined with five water regimes [leaf water potential, higher than -0.3 (well- watered), -0.5 and -0.8 (moderate drought), -1.0 and lower than -1.2 MPa (serious drought-stress)]. Increase in CO2 concentration induced a 60 % average increase in net photosynthetic rate (P^) under well-watered conditions. The effect of C700 became more pronounced with drought stress established, with an 80 % average increase in at as low as -0.8 MPa; leaf conductance to water vapour transfer (gs) and transpiration rate (£), however, were significantly decreased. Consequently, WUE increased under drought, through drought stress affected potential E sooner than potential P^. The interaction of CO2 x drought stress on WUE was significant in that Pn was stimulated while E in C700 enriched plants resembled that of C350 plants under drought. Hence if a doubling of atmospheric CO2 concentration occurs by the mid 2U* century, then greater P^ in F. crenata, G. biloba and^. firma may be expected and the drought susceptibility of these species will be substantially enhanced.