Drought-induced defoliation has recently been associated with the depletion of carbon reserves and increased mortality risk in Scots pine (Pinus sylvestris). We hypothesize that defoliated individuals are more sensitive to drought, implying that potentially higher gas exchange (per unit of leaf area) during wet periods may not compensate for their reduced photosynthetic area. We measured sap flow, needle water potentials and whole-tree hydraulic conductance to analyse the drought responses of co-occurring defoliated and nondefoliated Scots pines in northeast Spain during typical (2010) and extreme (2011) drought conditions. Defoliated Scots pines showed higher sap flow per unit leaf area during spring, but were more sensitive to summer drought, relative to nondefoliated pines. This pattern was associated with a steeper decline in soil-to-leaf hydraulic conductance with drought and an enhanced sensitivity of canopy conductance to soil water availability. Near-homeostasis in midday water potentials was observed across years and defoliation classes, with minimum values of -2.5 MPa. Enhanced sensitivity to drought and prolonged periods of near-zero gas exchange were consistent with low levels of carbohydrate reserves in defoliated trees. Our results support the critical links between defoliation, water and carbon availability, and their key roles in determining tree survival and recovery under drought., (© 2013 The Authors. New Phytologist © 2013 New Phytologist Trust.)