Studies examining the influence of biodiversity on ecosystem functioning have rarely considered water turnover, the quantitatively most important biogeochemical flux in ecosystems and a process with high sensitivity to climate warming. With a tree sapling experiment consisting of three diversity levels (1, 3, 5 species), 11 different species combinations and two soil moisture levels (moist and dry), we examined the influence of tree species diversity and species identity on stand transpiration (T) under ample and restricted water supply. We further asked whether growth in mixture leads to adaptive responses in the hydraulic system and water loss regulation in plants with heterospecific neighbors compared to plants in monoculture. In moist soil, T was on average ~11% higher in the mixtures than in the monocultures (significant net diversity effect), which can mostly be attributed to a selection effect. Overyielding in T was highest in mixtures when Tilia cordata and/or Fraxinus excelsior were present. Both species developed larger leaf areas (LA) and sapwood areas (SA) in monocultures than the other species and furthermore increased LA and SA from the monocultures to the mixtures. Thus, inherent species differences in LA and hydraulics, but also neighbor effects on these traits determined T to a large extend. In dry soil, the diversity effect on T was not larger but slightly smaller, which is not in agreement with other published studies. We conclude that differences between pure and mixed sapling assemblages in stand water consumption and drought response are mainly caused by species identity effects, while species diversity seems to be less influential.This article is protected by copyright. All rights reserved.