• The oxygen isotope composition (δ¹⁸O) of tree-ring cellulose is used to evaluate tree physiological responses to climate, but their interpretation is still limited due to the complexity of the isotope fractionation pathways.
• We assessed the relative contribution of seasonal needle and xylem water δ¹⁸O variations to the intra-annual tree-ring cellulose δ¹⁸O signature of larch trees at two sites with contrasting soil water availability in the Swiss Alps. We combined biweekly δ¹⁸O measurements of soil water, needle water, and twig xylem water with intra-annual δ¹⁸O measurements of tree-ring cellulose, xylogenesis analysis, and mechanistic and structural equation modeling.
• Intra-annual cellulose δ¹⁸O values resembled source water δ¹⁸O mean levels better than needle water δ¹⁸O. Large parts of the rings were formed under high proportional exchange with unenriched xylem water (p_ex). Maximum p_ex values were achieved in August and imprinted on sections at 50–75% of the ring. High p_ex values were associated with periods of high atmospheric evaporative demand (VPD). While VPD governed needle water δ¹⁸O variability, we estimated a limited Péclet effect at both sites.
• Due to a variable p_ex, source water has a strong influence over large parts of the intra-annual tree-ring cellulose δ¹⁸O variations, potentially masking signals coming from needle-level processes.