Eucalyptus plantations are already planted in or expanding to water-limited regions with a high risk of severe drought. In future drier and more variable climate including extreme events, the ability of trees to recover after severe droughts emerges as a crucial for the sustainability of forest plantations. An original experiment involving 80% reduction in throughfall was set up in Brazil to gain insight into the responses of Eucalyptus grandis trees to prolonged (3-year) extreme water deficit and the ability of this species to recover following water stress. Our study focused on the changes in basal area, stem radius, and total height measured by high-temporal resolution dendrometers and periodical surveys of trees affected by 80% throughfall reduction (treatment group) and in a control group. The differences in basal area, stem radius, and total height growth rate were compared between groups over (i) 37 months of 80% throughfall reduction and (ii) 31 months following the end of 80% throughfall reduction. The correlations among growth rates, stem radius fluctuations, and meteorological variables in each group were determined to gain insights into the trees' responses to environmental conditions and stem water status. The 80% reduction in throughfall over 3 years significantly reduced tree growth rates by 73% in basal area and 95% in total height. However, under normal water availability following throughfall reduction, the basal area growth rate of water-stressed trees was 97% higher than that of the control trees while total height growth rate was only 8% higher. Despite the severe water stress, no tree mortality was observed. Trees recovered 51% of their basal area over the 31-month recovery period. In contrast, only 5% of total height was recovered. In the treatment group, rapid responses to variation in rainfall events were observed during the 80% throughfall reduction period. Also, correlations between stem radius fluctuations and vapor pressure deficit indicate increased transpiration following the end of throughfall reduction. These relationships indicate high conservation of the integrity of the xylem vascular system over the 3 years of 80% throughfall reduction, a key factor in the increased resilience of the trees. In the absence of tree mortality, our results suggest the 80% throughfall reduction had a severe impact on tree growth but demonstrate great recovery ability of Eucalyptus grandis trees in basal area growth following such a severe water deficit.