Ongoing shifts in the species composition of Eastern US forests necessitate the development of frameworks to explore how species-specific water-use strategies influence ecosystem-scale carbon (C) cycling during drought. Here, we develop a diagnostic framework to classify plant drought-response strategies along a continuum of isohydric to anisohydric regulation of leaf water potential (Ψ(L)). The framework is applied to a 3-year record of weekly leaf-level gas exchange and Ψ measurements collected in the Morgan-Monroe State Forest (Indiana, USA), where continuous observations of the net ecosystem exchange of CO2 (NEE) have been ongoing since 1999. A severe drought that occurred in the middle of the study period reduced the absolute magnitude of NEE by 55%, though species-specific responses to drought conditions varied. Oak species were characterized by anisohydric regulation of Ψ(L) that promoted static gas exchange throughout the study period. In contrast, Ψ(L) of the other canopy dominant species was more isohydric, which limited gas exchange during the drought. Ecosystem-scale estimates of NEE and gross ecosystem productivity derived by upscaling the leaf-level data agreed well with tower-based observations, and highlight how the fraction of isohydric and anisohydric species in forests can mediate net ecosystem C balance.