Paclobutrazol (PBZ) has been associated with effects on the photosynthetic capacity of plants. PBZ affects the growth and development of plants in general. However, little is known about the effects of PBZ on photosynthetic performance and related anatomical features of herbaceous peony (Paeonia lactiflora Pall.) leaves. In the present study, PBZ application resulted in a significant reduction in peony plant height. Furthermore, PBZ application significantly increased photosynthetic rate (Pn), transpiration rate (Tr) and water use efficiency (WUE), but significantly decreased intercellular CO2 concentration (Ci) at some stages from the bolting stage to the bud stage of the plants, compared to controls. Moreover, PBZ application increased the maximum quantum yield of PSII photochemistry (Fv/Fm), coefficient of photochemical quenching (qP) and intrinsic PSII efficiency (ΦPSII), but decreased the coefficient of non-photochemical quenching (qN) and non-photochemical quenching (NPQ). Leaves treated with PBZ had a heavy aggregation of chloroplasts close to the cell wall, with distinct grana lamellae, more and bigger starch grains (on average for a chloroplast), and fewer plastoglobuli, as compared to the control. PBZ increased chlorophyll content (SPAD) and the number of chloroplasts in individual cells in the foliar ultrastructure. PBZ-treated leaves had a darker green color with decreased luminosity (L*) and increased hue angle (h°). The results indicated that plants treated with PBZ were superior in terms of increased photosynthetic characteristics when compared with untreated controls. The direct cause of the increase in Pn and leaf greenness of PBZ-treated P. lactiflora may be the increase in chlorophyll content.