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Leaf water potential regulation is a key process in whole plant and ecosystem functioning. While low water potentials induced by open stomata may initially be associated with greater CO2 supply and a higher water flux from the rhizosphere to the canopy, they also inhibit cell growth, photosynthesis and ultimately water supply. Here, we show that plants regulate their leaf water potential in an optimal manner under given constraints using a simple leaf water status regulation model and data from a global dryland leaf water potential database. Model predictions agree strongly with observations across locations and species and are further supported by experimental data. Leaf water potentials non-linearly decline with soil water potential, underlining the shift from maximizing water supply to avoiding stress with declining water availability. Our results suggest that optimal regulation of the leaf water status under varying water supply and stress tolerance is a ubiquitous property of plants in drylands. The proposed model moreover provides a novel quantitative framework describing how plants respond to short- and long-term changes in water availability and may help elaborating models of plant and ecosystem functioning. peerReviewed