Container-grown walnut seedlings (Juglans regia L.) were subjected to competition with rye grass (Lolium perenne L.) and to a 2-week soil drying cycle. One and 2 weeks after the beginning of the drought treatment, H2 18O (ä H +100‰) was added to the bottom layer of soil in the plant containers to create a vertical H2 18O gradient. Rye grass competition reduced aboveground and belowground biomass of the walnut seedlings by 60%, whereas drought had no effect. The presence of rye grass reduced the dry weight of walnut roots in the upper soil layer and caused a 50% reduction in lateral root length. Rye grass competition combined with the drought treatment reduced walnut leaf CO2 assimilation rate (A) and leaf conductance (gw) by 20 and 39%, respectively. Transpiration rates in rye grass, both at the leaf level and at the plant or tiller level, were higher than in walnut seedlings. Leaf intrinsic water-use efficiency (A/gw) of walnut seedlings increased in response to drought and no differences were observed between the single-species and mixed-species treatments, as confirmed by leaf carbon isotope discrimination measurements. Measurement of ä18O in soil and in plant xylem sap indicated that the presence of rye grass did not affect the vertical profile of soil water uptake by walnut seedlings. Walnut seedlings and rye grass withdrew water from the top and middle soil layers in well-watered conditions, whereas during the drought treatment, walnut seedlings obtained water from all soil layers, but rye grass took up water from the bottom soil layer only