Quercus suber(cork oak) is a sustainably exploited forest resource, producing a unique renewable raw material known as cork. With drought events imposing a negative impact on tree vitality, we need more knowledge on the genetic and environmental regulation of cork development to protect the cork sector. We focused on characterizing long-term drought-induced molecular adaptations occurring in stems, and identifying key genetic pathways regulating phellem development. One-year-old cork oak plants were grown for 6 months under well-watered, or water-deficit (WD) conditions and main stems were targeted for histological characterization and transcriptomic analysis. WD treatment impaired secondary growth, by reducing meristem activity at both vascular cambium and phellogen. We analyzed the transcriptional changes imposed by WD in phellem, inner bark, and xylem, and found a global downregulation of genes related to cell division, differentiation, and cell wall biogenesis. Phellem and inner bark showed upregulation of photosynthesis-related genes, highlighting a determinant role of stem photosynthesis in the adaptation to long-term drought. We show that developing phellem cells contain chloroplasts and their abundance increases under WD. Finally, we propose new candidate regulatory genes involved in the regulation of phellogen activity and demonstrate the involvement of phellem in drought-induced bark photosynthesis in young plants.HighlightPhellem development in cork oak is impaired in drought adaptation, by negative regulation of cell division and differentiation programs, while photosynthesis is induced to contributing to CO2recycling in the stem.