The Amazonian peach palm is presently the main species of heart-of- palm producer in many Brazilian regions. Here we evaluated the effects of soil water deficit and rewatering on leaf water potential (ψleaf), gas exchange and chlorophyll fluorescence emission in peach palms. Plants were grown in 80 L-plastic pots under greenhouse conditions. Water deficit was imposed by water withdrawing for 13 days, when irrigation was re-established for 8 days more. ψleaf was measured at 5:30 a.m. and 1:30 p.m. Gas exchange measurements were performed at 8:00 a.m. and at 2:00 p.m., after chlorophyll a fluorescence evaluations. The minimum ψleaf value observed at predawn was − 1.6 MPa, when net CO2 assimilation (PN) was zero on the 13th day of water deficit, thus showing mesophytes characteristics. The sharp PN decrease of 94%, 6 days after the beginning of treatments, demonstrated the drastic effect of the soil water deficit. After rewatering, a rapid recuperation of ψleaf was observed, whereas PN, transpiration rate (E) and stomatal conductance (gs) recovered more slowly, reaching values exhibited by the control plants only 7 days after rewatering. The lower maximal quantum yield of photosystem II (PSII) (FV/FM) values in the midday for plants under water deficit indicated dynamic photoinhibition of PS II to excessive PPFD. These results suggest a drought tolerance of peach palm plants, showing stomatal control of water losses and PN limitation, whereas the photosynthetic apparatus was maintained by photoprotection processes.