Cuttings of P. przewalski were exposed to two different watering regimes which were watered to 100 and 25 % of field capacity (WW and WS, respectively). Drought stress not only significantly decreased net photosynthetic rate (P N ), transpiration rate (E), stomatal conductance (g s ), efficiency of photosystem 2 (PS2) (F v /F m and yield), and increased intrinsic water use efficiency (WUE i ) under controlled optimal conditions, but also altered the diurnal changes of gas exchange, chlorophyll fluorescence, and WUE i . On the other hand, WS also affected the P N -photosynthetically active radiation (PAR) response curve. Under drought stress, P N peak appeared earlier (at about 10:30 of local time) than under WW condition (at about 12:30). At midday, there was a depression in P N for WS plants, but not for WW plants, and it could be caused by the whole microclimate, especially high temperature, low relative humidity, and high PAR. There were stomatal and non-stomatal limitations to photosynthesis. Stomatal limitation dominated in the morning, and low P N at midday was caused by both stomatal and non-stomatal limitations, whereas non-stomatal limitation dominated in the afternoon. In addition, drought stress also increased compensation irradiance and dark respiration rate, and decreased saturation irradiance and maximum net photosynthetic rate. Thus drought stress decreased plant assimilation and increased dissimilation through affected gas exchange, the diurnal pattern of gas exchange, and photosynthesis-PAR response curve, thereby reducing plant growth and productivity.