To maintain constant body temperature (Tb) over a wide range of ambient temperatures (Ta) endothermic animals require large amounts of energy and water. In hot environments, the main threat to endothermic homeotherms is insufficient water to supply that necessary for thermoregulation. We investigated flexible adjustment of traits related to thermoregulation and water conservation during acclimation to hot conditions or restricted water availability, or both, in the zebra finch, Taeniopygia guttata a small arid-zone passerine. Using indirect calorimetry, we measured changes in whole animal metabolic rate (MR), evaporative heat loss (EHL) and Tb before and after acclimation to 23 or 40 °C, with different availability of water. Additionally, we quantified changes in partitioning of EHL into respiratory and cutaneous avenues in birds exposed to 25 and 40 °C. In response to heat and water restriction zebra finches decreased MR, which together with unchanged EHL resulted in increased efficiency of evaporative heat loss. This facilitated more precise Tb regulation in heat-acclimated birds. Acclimation temperature and water availability had no effect on the partitioning of EHL into cutaneous or respiratory avenues. At 25 °C, cutaneous EHL accounted for ~ 60% of total EHL, while at 40 °C, its contribution decreased to ~ 20%. Consistent among-individual differences in MR and EHL suggest that these traits, provided that they are heritable, may be a subject to natural selection. We conclude that phenotypic flexibility in metabolic heat production associated with acclimation to hot, water-scarce conditions is crucial in response to changing environmental conditions, especially in the face of current and predicted climate change.