We investigated the impact of seasonal soil water deficit on the processes driving net ecosystem exchange of carbon (NEE) in old-growth and recently regenerating ponderosa pine (Pinus ponderosa Doug. ex Laws.) stands in Oregon. We measured seasonal patterns of transpiration, canopy conductance and NEE, as well as soil water, soil temperature and soil respiration. The old-growth stand (O) included two primary age classes (50 and 250 years), had a leaf area index (LAI) of 2.1 and had never been logged. The recently regenerating stand (Y) consisted predominantly of 14-year-old ponderosa pine with an LAI of 1.0. Both stands experienced similar meteorological conditions with moderately cold wet winters and hot dry summers. By August, soil volumetric water content within the upper 30 cm had declined to a seasonal minimum of 0.07 at both sites. Between April and June, both stands showed similar rates of transpiration peaking at 0.96 mm day−1; thereafter, trees at the Y site showed increasing drought stress with canopy stomatal resistance increasing 6-fold by mid-August relative to values for trees at the O site. Over the same period, predawn water potential (Ψpd) of trees at the Y site declined from –0.54 to –1.24 MPa, whereas Ψpd of trees at the O site remained greater than –0.8 MPa throughout the season. Soil respiration at the O site showed a strong seasonal correlation with soil temperature with no discernible constraints imposed by declining soil water. In contrast, soil respiration at the Y site peaked before seasonal maximal soil temperatures and declined thereafter with declining soil water. No pronounced seasonal pattern in daytime NEE was observed at either site between April and September. At the Y site this behavior was driven by concurrent soil water limitations on soil respiration and assimilation, whereas there was no evidence of seasonal soil water limitations on either process at the O site.