Demand for New Mexico’s limited water resources coupled with periodic drought has increased the necessity for tree water status monitoring to guide irrigation scheduling of pecan ( Carya illinoinensis ) orchards. The objectives of this study were to assess the impact of water status developed during the flood irrigation dry-down cycles on photosynthesis ( P _n ), and gas exchange [stomatal conductance ( g _S ) to H ₂ O ( g _H2O ), transpiration ( E ), and intercellular CO ₂ ( c _i )] and to establish values of midday stem water potential (Ψ _smd ) that are needed to maintain P _n and gas exchange of pecan. We conducted the study simultaneously on two southern New Mexico mature pecan orchards from 2011 through 2013. Flood irrigation as determined by grower practice was used on both orchards and P _n , g _H2O , E , and c _i were assessed at Ψ _smd of –0.4 to –2.0 MPa. Photosynthesis and gas exchange were higher in pecan trees shortly after irrigation than trees exhibiting water deficit near the end of a flood irrigation dry-down cycle. The decline in P _n was markedly noticeable when Ψ _smd dropped below –0.9 MPa. We attributed the reduction in P _n mostly to stomatal limitation. The decline in P _n and g _H2O exceeded 50% when Ψ _smd ranged from –1.5 to –2.0 MPa. For those reasons, we recommended that pecan orchards be maintained at Ψ _smd higher than –0.90 MPa to prevent significant reductions in carbon assimilation and gas exchange.