Cloud immersion affects the water budget of fog-affected forests not only by introducing an additional source of water (via cloud water interception by the canopy), but also by suppressing plant transpiration. The latter effect is often overlooked and not routinely quantified, restricting a complete understanding of the net hydrological effect of cloud immersion and the possible consequences of projected reductions in cloud immersion under drier and warmer climates in tropical montane regions in the coming decades. This paper describes an approach to quantify the suppression of stand-level tree transpiration (Et) due to cloud immersion using measurements of sapflow, fog occurrence (visibility), leaf wetness, and near-surface climate. Estimates of fog-induced Et suppression in a 10-year-old Pinus patula plantation in the montane cloud belt of central Veracruz, Mexico, are presented for two contrasting dry seasons and a wet season. Fog occurred for 32% of the total study period, although showing pronounced seasonal variation (e.g. 44% during the second dry season). When fog occurred it was accompanied by rainfall during three quarters of the total time. Although the canopy was wet for almost a third of the time, fog-induced canopy wetness constituted only a very small portion of this total (2%). Relative to sunny conditions, Et was suppressed by 90±7% under conditions of dense fog versus 83±7% under light fog and 78±10% during overcast conditions. Quantification of the potential change in annual Et associated with two scenarios for future cloud immersion at the study site revealed that: (i) when all fog occurrence is replaced by overcast conditions, mean annual Et (645±50mm) is likely to increase by only 2±1%; and (ii) when sunny conditions replace all foggy conditions, the likely increase in annual Et is 17±3%. As the rise in the regional lifting condensation level is likely to be on the order of only a couple of hundred meters and will probably result in a shift to overcast rather than clear-sky conditions, the present results suggest that the corresponding impact on Et may be relatively small. Consequently, a climate change-related reduction in dry-season precipitation, through the associated potential reductions in soil water reserves, presents a more worrisome prospect for plant–water relations and water yield from headwater catchments than diminishing cloud immersion alone. The present results highlight the need for better projections of climate change-related alterations in cloud cover and immersion, as well as rainfall patterns for tropical montane regions.