Seedling performance may determine plant distribution, especially in water-limited environments. Plants of Caragana korshinskii commonly grow in arid and semiarid areas in northwestern China, and endure water shortage in various ways, but little is known about their performance when water shortage occurs at early growth stages. The water relations, photosynthetic activity, chlorophyll (Chl) content and proline accumulation were determined in 1-year-old seedlings growing in a 1:1 mixture of Loess soil and Perlite and subjected to (1) a water deficit for 20 days and (2) kept adequately watered throughout. The water deficit induced low (-6.1 MPa) predawn leaf water potentials (LWP), but did not induce any leaf abscission. Stomatal conductance (gs), leaf transpiration rate (E), and net photosynthetic rate (PN) decreased immediately following the imposition of the water deficit, while the maximal photochemical efficiency of photosystem II (PSII) (Fv/Fm) and the effective quantum yield of PSII (ΦPSII) decreased 15 days later. An early and rapid decrease in gs, reduced E, increased Chl (a+b) loss, increased the apparent rate of photochemical transport of electrons through PSII (ETR)/PN, as well as a gradual increase in non-photochemical quenching of fluorescence (NPQ) and proline may have contributed to preventing ΦPSII from photodamage. C. korshinskii seedlings used a stress-tolerance strategy, with leaf maintenance providing a clear selective advantage, considering the occasional rainfall events during the growing season. and X. W. Fang ... [et al.].