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Abstract Leaf photosynthesis (Ps), nitrogen (N) and light environment were measured on Populus tremuloides trees in a developing canopy under free-air CO2 enrichment in Wisconsin, USA. After 2 years of growth, the trees averaged 1·5 and 1·6 m tall under ambient and elevated CO2, respectively, at the beginning of the study period in 1999. They grew to 2·6 and 2·9 m, respectively, by the end of the 1999 growing season. Daily integrated photon flux from cloud-free days (PPFDday,sat) around the lowermost branches was 16·8 ± 0·8 and 8·7 ± 0·2% of values at the top for the ambient and elevated CO2 canopies, respectively. Elevated CO2 significantly decreased leaf N on a mass, but not on an area, basis. N per unit leaf area was related linearly to PPFDday,sat throughout the canopies, and elevated CO2 did not affect that relationship. Leaf Ps light-response curves responded differently to elevated CO2, depending upon canopy position. Elevated CO2 increased Pssat only in the upper (unshaded) canopy, whereas characteristics that would favour photosynthesis in shade were unaffected by elevated CO2. Consequently, estimated daily integrated Ps on cloud-free days (Psday,sat) was stimulated by elevated CO2 only in the upper canopy. Psday,sat of the lowermost branches was actually lower with elevated CO2 because of the darker light environment. The lack of CO2 stimulation at the mid- and lower canopy was probably related to significant down-regulation of photosynthetic capacity; there was no down-regulation of Ps in the upper canopy. The relationship between Psday,sat and leaf N indicated that N was not optimally allocated within the canopy in a manner that would maximize whole-canopy Ps or photosynthetic N use efficiency. Elevated CO2 had no effect on the optimization of canopy N allocation. [ABSTRACT FROM AUTHOR]