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Diffusional limitations to photosynthesis, relative water content (RWC), pigment concentrations and their association with reflectance indices were studied in olive (Olea europaea) saplings subjected to water-stress and re-watering. RWC decreased sharply as drought progressed. Following rewatering, RWC gradually increased to pre-stress values. Photosynthesis (A), stomatal conductance (gs), mesophyll conductance (gm), total conductance (gt), photochemical reflectance index (PRI), water index (WI) and relative depth index (RDI) closely followed RWC. In contrast, carotenoid concentration, the carotenoid to chlorophyll ratio, water content reflectance index (WCRI) and structural independent pigment index (SIPI) showed an opposite trend to that of RWC. Photosynthesis scaled linearly with leaf conductance to CO2; however, A measured under non-photorespiratory conditions (A1%O2) was approximately two times greater than A measured at 21% [O2], indicating that photorespiration likely increased in response to drought. A1%O2 also significantly correlated with leaf conductance parameters. These relationships were apparent in saturation type curves, indicating that under non-photorespiratory conditions, CO2 conductance was not the major limitations to A. PRI was significant correlated with RWC. PRI was also very sensitive to pigment concentrations and photosynthesis, and significantly tracked all CO2 conductance parameters. WI, RDI and WCRI were all significantly correlated with RWC, and most notably to leaf transpiration. Overall, PRI correlated more closely with carotenoid concentration than SIPI; whereas WI tracked leaf transpiration more effectively than RDI and WCRI. This study clearly demonstrates that PRI and WI can be used for the fast detection of physiological traits of olive trees subjected to water-stress. [ABSTRACT FROM AUTHOR]