Peach [(Prunus persica (L.) Batsch., 'Rutgers Redleaf'] trees were grown for two seasons in a greenhouse with three pruning treatments (none, shoot tips removed, and half the shoots removed) and three grass treatments (no grass competition; perennial ryegrass, Lolium perenne L., 'Linn'; and tall fescue, Festuca arundinacea Schreb, 'Kentucky 31'). Competing grass reduced shoot growth, leaf area, and weight of fine roots in shallow soil, but did not affect the growth response to pruning. Regrowth from pruned trees was such that the shoot : root ratio was restored to that of unpruned trees. Leaf water potential, stomatal conductance, and photosynthesis had decreased markedly by 48 hours after irrigation ceased in trees without competition (larger trees) and to a similar level by 96 hours in trees with competition (smaller trees). Apparently, the reduced leaf area of peach trees grown with grass competition delayed water stress. Leaf abscisic acid levels were not directly affected by grass competition but increased as leaf water potential decreased, Grass competition modified morphology and reduced tree size, but did not affect shoot growth following pruning.