Internal water reserves are depleted and replenished daily, not only in succulent plants, but also in trees. The significance of these changes in tissue water storage for tree water relations was investigated by monitoring diurnal fluctuations in stem radius. In 6-year-old potted Norway spruce (Picea abies (L.) Karst.) trees, whole-tree transpiration rate (T), sap flow at the stem base and fluctuations in stem radius were measured at 10-min intervals over eight successive weeks. The dynamics of diurnal water storage in relation to the daily course of water movement was simulated and the contribution of stored water to T quantified. The finding that, in P. abies, the course of bark water content is linearly coupled to stem radius fluctuations provided the basis for linking stem radius changes to a functional flow and storage model for tree water relations. This model, which consists of physical functions only and is driven by a single input variable (T), accurately simulates the diurnal course of changes in stem radius and water storage of the tree crown and stem. It was concluded that fluctuations were mainly determined by the course of transpiration, The availability of soil water and the degree to which storage tissues were saturated were also factors affecting the diurnal course of stem radius changes. Internally stored water contributed to daily transpiration even in well-watered trees, indicating that stored water plays an important role not only during periods of drought, but whenever water transport occurs within the tree. Needle and bark water reserves were most heavily depleted during transpiration. Together they supplied approximately 10% of daily Ton sunny days, and up to 65% on cloudy days. On a daily basis, the crown (mainly needles) contributed approximately eight times more water to T than the stem (mainly bark). The depletion of the two storage pools and the water movements observed in the trees always occurred in the same sequence. In the morning, T first caused a depletion of the water stored in the crown. It then caused depletion of bark storage tissues at ever increasing distances from the needles. Up to 75% of the transpired water could be withdrawn from storage tissues when the increase in T reached a maximum.