As trees grow taller, the energetic cost of moving water to the leaves becomes higher and could begin to limit carbon gain and subsequent growth. The hydraulic limitation hypothesis states that as trees grow taller, the path length and therefore frictional resistance of water flow increases, leading to stomatal closure, reduced photosynthesis and decreased height growth in tall trees. Although this hypothesis is supported by the physical laws governing water movement in trees, its validation has been complicated by the complex structure of most tree species. Therefore, this study tested the hydraulic limitation hypothesis in Washingtonia robusta (H. Wendl.), a palm that, while growing to tall heights, is still structurally simple enough to act as a model organism for testing. There were no discernable relationships between tree height and stomatal conductance, stomatal densities, guard cell lengths, leaf dry mass per unit area (LMA) or sap flux, suggesting that these key aspects of hydraulic limitation are not reduced in taller palms. Taller palms did, however, have higher maximum daily photosynthetic assimilation rates, lower minimum leaf water potentials that occurred earlier in the day and fewer, smaller leaves than did shorter palms. Leaf epidermal cells were also smaller in taller palms compared with shorter ones. These findings are consistent with hydraulic compensation in that tall palms may be overcoming the increased path length resistance through smaller, more efficient leaves and lower leaf water potentials than shorter palms.