This study was designed to address a major source of uncertainty pertaining to coupled carbon-water cycles in montane forest ecosystems. The Sierra Nevada of California was used as a model system to investigate connections between the physiological performance of trees and landscape patterns of forest carbon and water use. The intrinsic water-use efficiency (iWUE)-an index of CO2 fixed per unit of potential water lost via transpiration-of nine dominant species was determined in replicated transects along an ∼1,500-m elevation gradient, spanning a broad range of climatic conditions and soils derived from three different parent materials. Stable isotope ratios of carbon and oxygen measured at the leaf level were combined with field-based and remotely sensed metrics of stand productivity, revealing that variation in iWUE depends primarily on leaf traits (∼24% of the variability), followed by stand productivity (∼16% of the variability), climatic regime (∼13% of the variability), and soil development (∼12% of the variability). Significant interactions between species composition and soil properties proved useful to predict changes in forest carbon-water relations. On the basis of observed shifts in tree species composition, ongoing since the 1950s and intensified in recent years, an increase in water loss through transpiration (ranging from 10 to 60% depending on parent material) is now expected in mixed conifer forests throughout the region.