Leaf water potentials, osmotic properties and structural characteristics were examined in the Australian tropical rainforest tree species, Castanospermum australe. These features were compared for individuals growing in the understorey and canopy of the undisturbed forest and in an open pasture from which the forest had been cleared. Leaf water potentials during the day declined to significantly lower values in the open-grown and canopy trees than in the understorey trees. During most of the day the opengrown tree experienced the lowest water potentials. These differences were paralleled by significant differences in tissue osmotic properties. The tissue osmotic potential at full hydration was lowest in the open-grown tree (-1.80 MPa), intermediate in the canopy trees (-1.38 MPa), and highest in the understorey trees (-0.80 MPa). As a result, the degree to which high and positive turgor pressures were maintained as water potentials declined was highest in the open-grown tree, intermediate in the canopy trees, and lowest in the understorey trees. The differences in tissue osmotic properties between individuals in the three crown positions were paralleled, in turn, by differences in leaf structual characteristics. Relative to leaves of the canopy and open-grown trees, leaves of the understorey trees had significantly larger epidermal cells with thinner cell walls, larger specific leaf areas and turgid weight: dry weight ratios, and a higher proportion of intercellular air space.