In grassland ecosystems, spatial and temporal variability in precipitation is a key driver of species distributions and population dynamics. We experimentally manipulated precipitation to understand the physiological basis for differences in responses of species to water availability in a southern mixed grass prairie. We focused on the performance of two dominant C 4 grasses, Andropogon gerardii Vitman and Schizachyrium scoparium (Michx.) Nash, in treatments that received ambient rainfall, half of ambient rainfall (“drought” treatment), or approximately double ambient rainfall (“irrigated” treatment). Water potentials of S. scoparium were lower than A. gerardii, suggesting superior ability to adjust to water deficit in S. scoparium. Additionally, drought reduced photosynthesis to a greater extent in A. gerardii compared to S. scoparium. Leaf-level photosynthesis rates were similar in ambient and irrigated treatments, but were significantly lower in the drought treatment. Although stomatal conductance was reduced by drought, this was not limiting for photosynthesis. Leaf δ 13C values were decreased by drought, caused by an increase in C i / C a . Chlorophyll fluorescence measures indicated light-harvesting rates were highest in irrigated treatments, and were lower in ambient and drought treatments. Moreover, drought resulted in a greater proportion of absorbed photon energy being lost via thermal pathways. Reductions in photosynthesis came as a result of non-stomatal limitations in the C 4 cycle. Our results provide mechanistic support for the hypothesis that S. scoparium is more drought tolerant than A. gerardii.