Chestnut breeding programs have been using a backcross breeding technique to produce trees with a predominantly American chestnut (<i>Castanea dentata</i>) genome and chestnut blight disease resistance from Chinese chestnut (<i>Castanea mollissima</i>). The potential for other physiological changes caused by breeding has yet to be widely studied. We quantify chestnut (American, Chinese, and BC₃F₃ hybrids) responses to water-stress and measure how co-occurring drought influences disease severity. The experiment was completed using 172 bare-root seedlings organized into a completely randomized factorial design in an outdoor rain-out shelter for one growing season. BC₃F₃ hybrid gas exchange (A_sat, g_s) rates were more similar to Chinese than American chestnuts over a 20-day dry-down period, and hybrid turgor loss point showed a more intermediate (between Chinese and American) response. The relationship of stomatal conductance to mid-day leaf water potential (Ψ_md) also exhibited both American and Chinese characteristics in the hybrid trees. There was no effect of drought on the disease severity for any of the chestnut groups. We find evidence that drought physiology has been altered in some BC₃F₃ hybrids, but do not find changes in disease severity when chestnuts are under co-occurring drought.