This study investigated the role of quercitol in osmotic adjustment in field-grown Eucalyptus astringens Maiden subject to seasonal drought stress over the course of 1 year. The trees grew in a native woodland and a farm plantation in the semi-arid wheatbelt region of south Western Australia. Plantation trees allocated relatively more biomass to leaves than woodland trees, but they suffered greater drought stress over summer, as indicated by lower water potentials, CO2 assimilation rates and stomatal conductances. In contrast, woodland trees had relatively fewer leaves and suffered less drought stress. Plantation trees under drought stress engaged in osmotic adjustment, but woodland trees did not. Quercitol made a significant contribution to osmotic adjustment in drought-stressed trees (25% of total solutes), and substantially more quercitol was measured in the leaves of plantation trees (5% dry matter) than in the leaves of woodland trees (2% dry matter). We found no evidence that quercitol was used as a carbon storage compound while starch reserves were depleted under drought stress. Differences in stomatal conductance, biomass allocation and quercitol production clearly indicate that E. astringens is both morphologically and physiologically 'plastic' in response to growth environment, and that osmotic adjustment is only one part of a complex strategy employed by this species to tolerate drought.