Abstract Key Message Hybrid saplings were more reactive to soil water deficit than Japanese and European larch. European larch had hydraulically safer wood and anisohydric behavior, Japanese and hybrid larch showed isohydric strategy. Abstract Deciduous larch species could be an alternative to evergreen conifers in reforestation, but little is known about drought sensitivity of their saplings. The effect of an experimental drought on hydraulics and quantitative wood anatomy was tested on saplings of European larch (EL, Larix decidua ), Japanese larch (JL, Larix kaempferi ) and their hybrid (HL). Across species, biomass, transpiration rate and relative water content were higher in controls than in drought stressed trees, but transpiration efficiency was lower. JL had the highest transpiration efficiency under drought, and EL the lowest, coinciding with slower growth of EL. Wood of EL formed before drought was hydraulically safer as shown by higher wall/lumen ratio and lower pit cavity area. EL neither had a significant increase in transpiration efficiency nor a reduction in transpiration rate under drought, suggesting that the stomata remained open under soil water deficit. HL saplings were the most reactive to water shortage, indicated by intra-annual density fluctuations and a decrease in relative water content of the sapwood. Significant reduction in transpiration by HL suggested a higher stomatal sensitivity, while the same leaf surface area was maintained and radial growth was still similar to its best parent, the JL. The latter showed a significantly lower leaf surface area under drought than controls. EL, with its hydraulically safer wood, followed an anisohydric behavior, while JL and HL revealed an isohydric strategy. Altogether, our results suggest species dependent acclimations to drought stress, whereby HL followed the strategy of JL rather than that of EL.