Do organisms make beneficial physiological adjustments in response to environmental change? We examined this question by measuring the effects of short-term (12-36 h) and long-term (larval lifetime) hydric stress on the tobacco hornworm, Manduca sexta. Larvae were reared from the first instar on low-water (69%) or high-water (80%) artificial diets and then transferred early in the fifth instar to the same or opposite diet (2x2 design). Within the subsequent 36 h, we measured 24-h growth rates and three primary determinants of the water budget: water gain via consumption and water loss via evaporation and defecation. Larvae preexposed to low-water diet grew less rapidly on low-water diet than those switched acutely to low-water diet from high-water diet, showing that larvae preexposed to a particular environment do not necessarily acclimate beneficially to that environment. Our data on water fluxes to and from larvae, however, strongly suggest that water-stressed larvae did make beneficial physiological adjustments. Larvae responded to short-term hydric stress by minimizing rates of water excretion, primarily by increasing rates of rectal water absorption. Larvae responded to chronic water stress by significantly reducing rates of evaporative water loss; they also showed additional reductions in fecal water excretion, but these decreases were due to lowered consumption and not to further increases in rate of rectal water absorption. This mismatch between maladaptive acclimation of organismal performance and beneficial adjustment of suborganismal traits can be reconciled by recognizing that organismal physiology is hierarchical: fitness-related performance traits represent the aggregate outcome of numerous, more mechanistic physiological traits. Although chronic exposure to an environment may depress the aggregate effect of these mechanistic traits on performance, organisms are not precluded from making beneficial adjustments to individual traits contributing to performance.