Internal water reserves in bark and foliage of trees contribute to transpiration (T) and play an essential role in optimizing water transport by buffering extreme peaks of water consumption. We examined patterns of stem shrinkage and their relationship to tree water dynamics. We measured fluctuations in root radius and stem radius at different stem heights, T of twigs at the top of the crown and sap flow velocities in stem sections of mature subalpine Norway spruce (Picea abies (L.) Karst.) trees over 2 years. The output of each sensor was coupled by physical functions to a mechanistic flow and storage model of tree water relations. The data verified the model-predicted lag in water storage depletion in response to the onset of transpiration and the lag increased with increasing distance from the crown periphery. Between the crown and stem base, the delay ranged from a few minutes to several hours, depending on microclimatic conditions and tree water status. Stem volume changes were proportional to the amount of water exchanged between the elastic tissues of the bark and the rigid xylem, indicating that the "peristaltic" wave of stem contraction along the flow path represented depletion of water stored in bark. On a daily basis, stems lost between 0.2 and 0.5% of their volume as a result of bark dehydration, corresponding to about 2 to 5 l of water. This water contributed directly to T. According to the model based on hydraulic principles, there are three main components underlying the dynamics of water storage depletion: flow resistance, storage capacities of needles and bark, and T of each tree section. The resistances and capacities were proportional to the response delay, whereas T in the lower parts of the tree was inversely proportional. The pattern of T within the crown depended on water intercepted by the branches. Because of these weather-dependent factors, there was no time constant for the response delay along the flow path. Nevertheless, the upper crown and the root section tended to have longer response delays per meter of flow path than the stem. The diurnal course of stem radius fluctuations represents the sum of all external and internal conditions affecting tree water relations; stem radius fluctuations, therefore, provide a sensitive measure of tree water status.