Drought is projected to occur more frequently and intensely in the coming decades, and the extent to which it will affect forest functioning will depend on species-specific responses to water stress. Aiming to understand the hydraulic traits and water dynamics behind water-saver and water-spender strategies in response to drought and recovery, we conducted a pot experiment with two species with contrasting physiological strategies, Scots pine (Pinus sylvestris L.) and Portuguese oak (Quercus faginea L.). We applied two cycles of soil drying and recovery and irrigated with isotopically different water to track fast changes in soil and stem water pools, while continuously measuring physiological status and xylem water content from twigs. Our results provide evidence for a tight link between the leaf-level response and the water uptake and storage patterns in the stem. The water-saver strategy of pines prevented stem dehydration by rapidly closing stomata which limited their water uptake during the early stages of drought and recovery. Conversely, oaks showed a less conservative strategy, maintaining transpiration and physiological activity under dry soil conditions, and consequently becoming more dehydrated at the stem level. We interpreted this dehydration as the release of water from elastic storage tissues as no major loss of hydraulic conductance occurred for this species. After soil rewetting, pines recovered pre-drought leaf water potential rapidly, but it took longer to replace the water from conductive tissues (slower labeling speed). In contrast, water-spender oaks were able to quickly replace xylem water during recovery (fast labeling speed), but it took longer to refill stem storage tissues, and hence to recover pre-drought leaf water potential. These different patterns in sap flow rates, speed and duration of the labeling reflected a combination of water-use and storage traits, linked to the leaf-level strategies in response to drought and recovery.