Photosynthesis, water status, and associated physiological parameters were measured in chronically drought-stressed seedlings (5 years of below-average precipitation, 107 cm net deficit) of Abies lasiocarpa (Hook.) Nutt. above (treeline ecotone site, TS) and below (forest site, FS) a Rocky Mountain timberline. In contrast to normal seasonal patterns reported for timberline conifer trees, xylem water potentials were exceptionally low in early summer and remained low for the rest of the summer. Although photosynthesis was not significantly different between the two sites, early season photosynthesis was greater than late-season photosynthesis, especially at FS. Mean daily values of leaf conductance to water vapor (gwv) and transpiration (E) were also low at the beginning of summer (gwv from 0.01 mol·m–2·s–1 to 0.13 mol·m–2·s–1 and E from 0.4 μmol·m–2·s–1 to 2.9 μmol·m–2·s–1) and continued to decrease through summer (an approximate 10-fold decrease in gwv and a 2-fold to 3-fold decrease in E), which resulted in increasing water-use efficiency as summer progressed. Although the slope of instantaneous photosynthesis – intercellular CO2 concentration curves was reduced (lower carboxylation efficiency) from July to September, the relative stomatal limitation to carbon gain was less than 50% over the entire measurement period. Mean daily intercellular CO2 concentrations decreased from near ambient levels (approximately 350–360 ppm) to 290 ppm over the course of summer. Overall, nonstomatal limitations appeared to have the largest impact on photosynthetic carbon gain, although seasonal decreases in leaf conductance and a corresponding depletion of intercellular CO2 indicated that there were also significant stomatal limitations to carbon gain that resulted in a continued regulation of greater water use efficiency.