Biomass, leaf water potential (Ψl), net photosynthetic rate (PN), transpiration rate (E), stomatal conductance (gs), leaf to air temperature difference (Tdiff), and instantaneous water use efficiency (WUE) were measured in the seedlings of Dalbergia sissoo Roxb. grown under irrigation of 20 (W1), 14 (W2), 10 (W3), and 8 (W4) mm. Treatments were maintained by re-irrigation when water content of the soil reached 7.4% in W1, 5.6% in W2, 4.3% in W3, and 3.2% in W4. Seedlings in a control (W5) were left without irrigation after maintaining the soil field capacity (10.7%). Seedlings of W1 had highest biomass that was one tenth in W5. Biomass allocation was highest in leaf in W2 and in root in W4 and W5 treatments. Difference between predawn leaf water potential (ΨPd) and midday (Ψmid) increased with soil water stress and with vapour pressure deficit (VPD) in April and May slowing down the recovery in plant leaf water status after transpiration loss. PN, E, and gs declined and Tdiff increased from W1 to W5. Their values were highly significant in April and May for the severely stressed seedlings of W4 and W5. PN increased from 08:00 to 10:00 and E increased until 13:00 within the day for most of the seedlings whereas gs decreased throughout the day from 08:00 to 17:00. PN and E were highest in March but their values were low in January, February, April, and May. Large variations in physiological variables to air temperature, photosynthetically active radiation, and vapour pressure deficit (VPD) indicated greater sensitivity of the species to environmental factors. WUE increased from W1 to W2 but decreased drastically at high water stress particularly during hot summer showing a kind of adaptation in D. sissoo to water stress. However, low biomass and reduced physiological functions at <50% of soil field capacity suggest that this species does not produce significant biomass at severe soil water stress or drought of a prolonged period. and B. Singh, G. Singh.