A comparative study has been made of the photosynthetic physiological ecology and carbon isotope discrimination characteristics for modern-day bryophytes and closely related algal groups. Firstly, the extent of bryophyte distribution and diversification as compared with more advanced land plant groups is considered. Secondly, measurements of instantaneous carbon isotope discrimination (D), photosynthetic CO2 assimilation and electron transport rates were compared during the drying cycles. The extent of surface diffusion limitation (when wetted), internal conductance and water use efficiency (WUE) at optimal tissue water content (TWC) were derived for liverworts and a hornwort from contrasting habitats and with differing degrees of thallus ventilation (as intra-thalline cavities and internal airspaces). We also explore how the operation of a biophysical carbon-concentrating mechanism (CCM) tempers isotope discrimination characteristics in two other hornworts, as well as the green algae Coleochaete orbicularis and Chlamydomonas reinhardtii. The magnitude of D was compared for each life form over a drying curve and used to derive the surface liquid-phase conductance (when wetted) and internal conductance (at optimal TWC). The magnitude of external and internal conductances, and WUE, was higher for ventilated, compared with non-ventilated, liverworts and hornworts, but the values were similar within each group, suggesting that both factors have been optimized for each life form. For the hornworts, leakiness of the CCM was highest for Megaceros vincentianus and C. orbicular is (approx. 30%) and, at 5%, lowest in C. reinhardtii grown under ambient CO2 concentrations. Finally, evidence for the operation of a CCM in algae and hornworts is considered in terms of the probable role of the chloroplast pyrenoid, as the origins, structure and function of this enigmatic organelle are explored during the evolution of land plants. ; We thank D. C. Cargill and J. C. Villarreal for the hornwort material. This research was supported by grant BFR06/30 from the Luxemburg Ministry of Culture, Higher Education and Research, and by the Ecology Section of the National Museum of Natural History, Luxemburg (Dr Christian Ries), as well as by the Department of Plant Sciences of the University of Cambridge.