Symptoms of laurel wilt, a vascular plant disease caused by the fungus Raffaelea lauricola, are similar to those of drought stress. We compared physiological responses of redbay and avocado trees infected with laurel wilt to responses of trees with drought stress. Trees were either inoculated with R. lauricola, subjected to drought stress, or irrigated daily and not inoculated (non-stressed, control). Disease symptoms, net CO2 assimilation (A), stomatal conductance of water vapor (gs), substomatal CO2 concentration (Ci), intrinsic water use efficiency (WUEi), leaf chlorophyll index (LCI), the ratio variable to maximum leaf chlorophyll fluorescence (Fv/Fm), leaf nitrogen (N) concentration, and the ratio of 13C to 12C (δ13C) in leaves were determined prior to inoculation and the imposition of drought stress and when plants showed moderate to severe stress symptoms. Laurel wilt-infected and drought-stressed trees of each species had lower A and gs and higher Ci, Fv/Fm, and LCI than non-stressed trees. Redbay trees with laurel wilt had significantly higher (less negative) leaf δ13C values than non-stressed trees, whereas no significant differences were found in leaf δ13C values among avocado treatments. In avocado trees with laurel wilt, there was a negative linear correlation between δ13C values and Ci but no significant correlation between δ13C values and leaf N in the inoculated trees. Inhibition of photosynthesis in avocado and redbay infected with laurel wilt was determined to be a result of the both stomatal and biochemical factors.