The evidence that is currently available demonstrates that future changes in precipitation patterns will affect plant carbon uptake. However, the outcome in terms of success, productivity and fecundity depends upon individual species and different responses of various growth forms. Examination of these differences in response in dry versus rewetting conditions can be used to highlight the limitations coherent in different strategies adopted by, for example, evergreen shrubs and grasses. We investigated the leaf-level photosynthetic performance, leaf C, N and d13C along with vegetation cover and biomass in the evergreen dwarf shrub Calluna vulgaris and the grass species Deschampsia flexuosa in a temperate heath during seasonal changes in soil moisture. Higher photosynthetic capacity compensated for lower stomatal conductance and sustained higher rates of photosynthesis in the grass compared to the dwarf shrub. In combination with dieback of aboveground biomass and reduction of stomatal conductance reduction during dry conditions, the grass continued to have high carbon uptake in the remaining leaves. The dwarf shrub endured the dry conditions by preserving shoot biomass and reducing stomatal conductance. Soil rewetting increased leaf nitrogen and photosynthesis in the grass much more than for the dwarf shrub. These different strategies may have a considerable impact on carbon uptake and on the ability of a species to compete, as future climatic changes are likely to extend the summer drought period together with the more frequent and extensive precipitation events outside the summer season.