Heavy pruning to lower tree height of persimmon results in excessive production of water sprouts and reduced yield. This experiment was conducted on ‘Fuyu’ (Diospyros kaki) trees to assess if the time for terminal bud set of water sprouts affected flower bud formation. Some sprouts were not pruned to serve as fruiting branches for the next season. Thirty to 40 water sprouts were tagged in 2005 and 2006, the growth of which stopped from mid-June to late August. The later terminal buds set, the lower the percent dry weight in the apical 10 cm. The apical segments of sprouts that continued to grow to mid- to late August were characterized by low soluble sugars, starch, and inorganic elements such as nitrogen (N), phosphorus (P), potassium (K), calcium (Ca), and magnesium (Mg) compared with those that set terminal buds earlier. The number of flower buds from the water sprouts that set terminal buds by early August the previous year bore more than 12 flower buds the next year, whereas those that grew to mid- to late August bore fewer than three. It was concluded that water sprouts could be used as fruiting branches for the next year as long as terminal buds set by early August, thereby alleviating yield reductions that come with heavy pruning.