Leaf and whole plant-level functional traits were studied in five dominant woody savannah species from Central Brazil (Cerrado) to determine whether reduction of nutrient limitations in oligotrophic Cerrado soils affects carbon allocation, water relations and hydraulic architecture. Four treatments were used: control, N additions, P additions and N plus P additions. Fertilizers were applied twice yearly, from October 1998 to March 2004. Sixty-three months after the first nutrient addition, the total leaf area increment was significantly greater across all species in the N- and the N + P-fertilized plots than in the control and in the P-fertilized plots. Nitrogen fertilization significantly altered several components of hydraulic architecture: specific conductivity of terminal stems increased with N additions, whereas leaf-specific conductivity and wood density decreased in most cases. Average daily sap flow per individual was consistently higher with N and N + P additions compared to the control, but its relative increase was not as great as that of leaf area. Long-term additions of N and N + P caused midday PsiL to decline significantly by a mean of 0.6 MPa across all species because N-induced relative reductions in soil-to-leaf hydraulic conductance were greater than those of stomatal conductance and transpiration on a leaf area basis. Phosphorus-fertilized trees did not exhibit significant changes in midday PsiL. Analysis of xylem vulnerability curves indicated that N-fertilized trees were significantly less vulnerable to embolism than trees in control and P-fertilized plots. Thus, N-induced decreases in midday PsiL appeared to be almost entirely compensated by increases in resistance to embolism. Leaf tissue water relations characteristics also changed as a result of N-induced declines in minimum PsiL: osmotic potential at full turgor decreased and symplastic solute content on a dry matter basis increased linearly with declining midday PsiL across species and treatments. Despite being adapted to chronic nutrient limitations, Cerrado woody species apparently have the capacity to exploit increases in nutrient availability by allocating resources to maximize carbon gain and enhance growth. The cost of increased allocation to leaf area relative to water transport capacity involved increased total water loss per plant and a decrease in minimum leaf water potentials. However, the risk of increased embolism and turgor loss was relatively low as xylem vulnerability to embolism and leaf osmotic characteristics changed in parallel with changes in plant water status induced by N fertilization.