Seedlings of two sympatric oak species, Quercus robur L. and Quercus petraea (Matt.) Liebl., were grown in common garden conditions to test for potential interspecific differences in intrinsic water-use efficiency (WUE). Intrinsic water-use efficiency was estimated based on carbon isotope composition of shoots (δ13C) and on gas exchange measurements (ratio of net CO2 assimilation rate to stomatal conductance (A/gsw)). In addition, genotype × environment interactions were tested by subjecting the seedlings to four irradiance treatments (8, 18, 48 and 100% of incident solar irradiance) imposed by neutral shading nets, and, in the 100% irradiance treatment, two watering regimes. In all treatments, initial growth of Q. robur was faster than that of Q. petraea. In both species, there was a tight correlation between δ13C and A/gsw. Intrinsic water-use efficiency increased with increasing irradiance (almost doubling from 8 to 100% irradiance), and this effect paralleled the increase in A with increasing irradiance. In full sun, WUE of Q. petraea seedlings was 10–15% higher than in Q. robur seedlings, with the difference attributable to a difference between the species in gsw. The interspecific difference in WUE was maintained during drought, despite the appreciable increase inWUEand decrease in growth imposed by drought. No interspecific differences inWUEwere observed at low irradiances, suggesting a strong genotype × environment interaction for WUE. These findings confirm the existence of interspecific genetic differences in WUE, but also show that there is large intraspecific variability and plasticity in WUE. The initially greater height and biomass increments inQ. robur seedlings illustrate the ability of this species to out-compete Q. petraea in the early stages of forest regeneration. For adult trees growing in closed canopies, the high WUE of Q. petraea may contribute significantly to its survival during dry years, whereas the low WUE of Q. robur may account for the frequently observed declines in adult trees of this species following drought.