Recent work has shown that hydraulic vulnerability of Douglas-fir needles decreases with increasing height, allowing foliage at greater height to maintain leaf hydraulic conductance (K_leaf) at more negative leaf water potentials (Y_l). This height-related trend may allow taller trees to continue to photosynthesize during periods of greater water stress, but may also involve trade-offs that reduce leaf water transport capacity. To determine the basis for this trend we analyzed leaf hydraulic and tracheid anatomical properties of foliage collected at the tops of Douglas-fir trees along a height gradient from 5 to 55 m. In order to assess K_leaf and resistance to cavitation of foliar xylem, a timed re-hydration technique was used in conjunction with data from pressure-volume curves to develop hydraulic vulnerability curves for needles attached to small twigs. Maximum K_leaf decreased with increasing height from 9.8 mmol m^-2 s^-1 MPa^-1 at 5 m to 4.9 mmol m^-2 s^-1 MPa^-1 at 55.0 m. Values of Y_l at which K_leaf was substantially reduced declined with height by 0.012 MPa m^-1 (r² = 0.95). Conduit cross-sectional area per needle (Ac), conduit mean hydraulic diameter (D_c) and conduit number decreased with height by 19 um² m^-1 (r² = 0.88), 0.031 um m^-1 (r² = 0.98) and 0.43 m^-1 (r² = 0.78), respectively. Thickness-to-span ratio (t_w/b)² increased with height by 1.04 x 10^-3 m^-1 (r² = 0.68). The results suggest that the ability of leaves to cope with vertical gradients of increasing xylem tension was attained at the expense of reduced water transport capacity.