Stands of groundnut (Arachis hypogaeaL. cv. Kadiri‐3) were grown in controlled environment glasshouses at mean atmospheric CO2concentrations of 375 or 700 μmol mol−1and daily mean air temperatures of 28 or 32°C on irrigated or drying soil profiles. Leaf water (Ψl) and solute potential (Ψs), relative water content (RWC), stomatal conductance (gl) and net photosynthesis (Pn) were measured at midday for the youngest mature leaf throughout the growing season. Elevated CO2and temperature had no detectable effect on the water relations of irrigated plants, but higher values of RWC, Ψland Ψswere maintained for longer under elevated CO2during progressive drought. Turgor potential (Ψp) reached zero when Ψldeclined to −1.6 to −1.8 MPa in all treatments; turgor was lost sooner when droughted plants were grown under ambient CO2. A 4°C increase in mean air temperature had no effect on Ψsin droughted plants, but elicited a small increase in Ψl; midday glvalues were lower under elevated than under ambient CO2, and Ψland gldeclined below −1.5 MPa and 0.25 cm s−1, respectively, as the soil dried. Despite the low glvalues recorded for droughted plants late in the season, Pnwas maintained under elevated CO2, but declined to zero 3 weeks before final harvest under ambient CO2. Concurrent reductions in gland increases in water use efficiency under elevated CO2prolonged photosynthetic activity during drought and increased pod yields relative to plants grown under ambient CO2. The implications of future increases in atmospheric CO2for the productivity of indeterminate C3crops grown in rainfed subsistence agricultural systems in the semi‐arid tropics are discussed.