Sapwood traits like vessel diameter and intervessel pit characteristics play key roles in maintaining hydraulic integrity of trees. Surprisingly little is known about how sapwood traits covary with tree height and how such trait-based variation could affect the efficiency of water transport in tall trees. This study presents a detailed analysis of structural and functional traits along the vertical axes of tall Eucalyptus grandis trees. To assess a wide range of anatomical and physiological traits, light and electron microscopy was used, as well as field measurements of tree architecture, water use, stem water potential and leaf area distribution. Strong apical dominance of water transport resulted in increased volumetric water supply per unit leaf area with tree height. This was realized by continued narrowing (from 250 to 20 µm) and an exponential increase in frequency (from 600 to 13 000 cm-2) of vessels towards the apex. The widest vessels were detected at least 4 m above the stem base, where they were associated with the thickest intervessel pit membranes. In addition, this study established the lower limit of pit membrane thickness in tall E. grandis at ~375 nm. This minimum thickness was maintained over a large distance in the upper stem, where vessel diameters continued to narrow. The analyses of xylem ultrastructure revealed complex, synchronized trait covariation and trade-offs with increasing height in E. grandis. Anatomical traits related to xylem vessels and those related to architecture of pit membranes were found to increase efficiency and apical dominance of water transport. This study underlines the importance of studying tree hydraulic functioning at organismal scale. Results presented here will improve understanding height-dependent structure-function patterns in tall trees.