A pot trial was implemented to determine the effect of soil water stress following transplanting on shoot water potential and stomatal conductance of Pinus patula seedlings. The relationship of seedling morphology to measures of water stress was also investigated. The trial consisted of two watering treatments: a control (no water stress) and a severe water stress (no further water after planting). The treatments were applied to recently transplanted seedlings selected to reflect a range of sizes typical in an operational environment. Measures of shoot water potential and stomatal conductance, root and shoot growth and environmental variables were made. The results indicated that P. patula seedlings tolerated high air and soil temperatures (above 35°C) and low soil water availability (−1.5 MPa). The water potential threshold for changes in stomatal conductance was in the region of −0.8 to −0.9 MPa and stomatal closure had occurred at a shoot water potential of between −1.8 and −2.1 MPa. Mortality occurred when shoot water potential declined to below −3.0 MPa. There was variability between seedlings in their potential for survival and growth. Inherently bigger seedlings had a greater capacity for new root growth following planting. Mass of new roots was significantly and positively related to higher rates of transpiration under conditions of low soil moisture.