We investigated physiological and morphological responses to flooding and recovery in Eucalyptus camaldulensis subsp. refulgens, a riparian tree species from a dryland region prone to intense episodic floods. Seedlings in soil flooded for 88 d produced extensive adventitious roots, displayed stem hypertrophy (stem diameter increased by 93%) and increased root porosity owing to aerenchyma formation. Net photosynthesis (Pn) and stomatal conductance (gs) were maintained for at least 2 weeks of soil flooding, contrasting with previous studies of other subspecies of E. camaldulensis. Gradual declines followed in both gs (30% less than controls) and Pn (19% less). Total leaf soluble sugars did not differ between flooded and control plants. Root mass did not recover 32 d after flooding ceased, but gs was not lower than controls, suggesting the root system was able to functionally compensate. However, the limited root growth during recovery after flooding was surprising given the importance of extensive root systems in dryland environments. We conclude that early flood tolerance could be an adaptation to capitalize on scarce water resources in a water-limited environment. Overall, our findings highlight the need to assess flooding responses in relation to a species' fitness for particular flood regimes or ecological niches.