<p>Mediterranean-type ecosystems occur in five regions worldwide and are characterized by intense summer drought that constrains plant carbon gain and water-use strategies. Along the leaf economics spectrum, herbs typically exhibit higher photosynthetic capacity but lower water-use efficiency than woody species due to greater stomatal (gₛ) and mesophyll conductance (gₘ). However, this expectation may not hold under the particularly arid summer conditions of the central Chilean matorral, where prolonged drought acts as a strong environmental filter on plant water-use strategies. Here, we evaluated photosynthetic capacity, diffusional and biochemical limitations, and intrinsic water-use efficiency (iWUE) in co-occurring herbs, shrubs, and trees. Using combined gas exchange, chlorophyll fluorescence, and carbon isotope composition (δ¹³C), we quantified gₛ and gₘ, partitioned photosynthetic limitations, and compared traditional iWUE with a mesophyll-integrated metric (iWUE_mes). Herbs exhibited the highest area- and mass-based photosynthetic rates, whereas shrubs and trees showed progressively lower values, driven primarily by diffusional rather than biochemical limitations. Classical iWUE (Aₙ/gₛ) did not differ among functional groups, whereas iWUE_mes showed a significant overall effect, with trees differing from herbs and shrubs, indicating divergence in carbon–water trade-offs. Evergreen trees, characterized by high leaf mass per area and low gₘ, experienced the strongest diffusional limitation. Overall, our findings demonstrate that mesophyll conductance plays a central role in regulating photosynthetic performance and water-use strategies, refining expectations derived from global trait-based frameworks and improving predictions of plant responses to increasing aridity in Mediterranean-type ecosystems.</p>