Xylem cavitation during drought is proposed as a major driver of canopy collapse, but the mechanistic link between hydraulic failure and leaf damage in trees is still uncertain. Here, we used the tree species manna gum (Eucalyptus viminalis) to explore the connection between xylem dysfunction and lethal desiccation in leaves. Cavitation damage to leaf xylem could theoretically trigger lethal desiccation of tissues by severing water supply under scenarios such as runaway xylem cavitation, or the local failure of terminal parts of the leaf vein network. To investigate the role of xylem failure in leaf death, we compared the timing of damage to the photosynthetic machinery (Fv/Fm decline) with changes in plant hydration and xylem cavitation during imposed water stress. The water potential at which Fv/Fm was observed to decline corresponded to the water potential marking a transition from slow to very rapid tissue dehydration. Both events also occurred simultaneously with the initiation of cavitation in leaf high-order veins (HOV, veins from the third order above) and the analytically derived point of leaf runaway hydraulic failure. The close synchrony between xylem dysfunction and the photosynthetic damage strongly points to water supply disruption as the trigger for desiccation of leaves in this hardy evergreen tree. These results indicate that runaway cavitation, possibly triggered by HOV network failure, is the tipping agent determining the vulnerability of E. viminalis leaves to damage during drought and suggest that HOV cavitation and runaway hydraulic failure may play a general role in determining canopy damage in plants.