C 4 photosynthesis has evolved more than 60 times as a carbon-concentrating mechanism to augment the ancestral C 3 photosynthetic pathway. The rate and the efficiency of photosynthesis are greater in the C 4 than C 3 type under atmospheric CO 2 depletion, high light and temperature, suggesting these factors as important selective agents. This hypothesis is consistent with comparative analyses of grasses, which indicate repeated evolutionary transitions from shaded forest to open habitats. However, such environmental transitions also impact strongly on plant -water relations. We hypothesize that excessive demand for water transport associated with low CO 2 , high light and temperature would have selected for C 4 photosynthesis not only to increase the efficiency and rate of photosynthesis, but also as a water-conserving mechanism. Our proposal is supported by evidence from the literature and physiological models. The C 4 pathway allows high rates of photosynthesis at low stomatal conductance, even given low atmospheric CO 2 . The resultant decrease in transpiration protects the hydraulic system, allowing stomata to remain open and photosynthesis to be sustained for longer under drying atmospheric and soil conditions. The evolution of C 4 photosynthesis therefore simultaneously improved plant carbon and water relations, conferring strong benefits as atmospheric CO 2 declined and ecological demand for water rose.