Under constant salinity we analysed the leaf characteristics of Laguncularia racemosa (L.) Gaertn. in combination with gas exchange and carbon isotopic composition to estimate leaf water-use efficiency (WUE) and potential nitrogen-use efficiency (NUE). NaCl was not added to the control plants and the others were maintained at salinities of 15 and 30 ‰ (S0, S15, and S30, respectively). Leaf succulence, sodium (Na), nitrogen (N), and chlorophyll (Chl) contents increased under salinity. Salinity had a negative impact on net photosynthetic rate (PN) and stomatal conductance (gs) at high and moderated irradiances. Potential NUE declined significantly (p<0.05) with salinity by 37 and 58 % at S15 and S30, respectively, compared to S0 plants. Conversely, compared to S0 plants, PN/gs increased under saline conditions by 12 % (S15) and 50 % (S30). Thus, WUE inferred from PN/gs was consistent with salinity improved short-term WUE. Long-term leaf WUE was also enhanced by salinity as suggested by significantly increased leaf δ13C with salinity. Improved WUE under salinity explains the eco-physiological success of mangrove species under increasing salinity. Conversely, decline in NUE may pose a problem for L. racemosa under hyper-saline environments regardless of N availability.