Plant species living in the understory increase carbon (C) allocation toward leaf production for maximizing light capture at the expense of roots and stems, with negative consequences for the whole-plant hydraulic conductance. Moreover, under some conditions, the high atmospheric evaporative demand occurring in Mediterranean areas may be not well buffered by the canopy, which might be the case for relict conifer Abies pinsapo Boiss. growing in the forest understory. We hypothesized that acclimation to combined understory shade and high atmospheric dryness can be achieved through the adjustment of water losses to cope with the restriction in water transport. The results reveal high structural plasticity in A. pinsapo that allows light harvesting of this species to maximize light capture in the forest understory, and maintain a positive C balance under low light conditions. However, growth in the understory resulted in reduced leaf-specific conductivity, up to approximately four to five times, implying decreased plant capacity to supply water to the leaves. In order to cope with the high atmospheric evaporative demand in the understory, there is an adjustment of the stomatal conductance to the hydraulic conductivity by means of a reduction in the stomatal density in understory individuals, which is due to the almost complete lack of stomata in the adaxial side of the needles. To the extent of our knowledge, such a drastic phenotypic response found in a conifer when growing under shaded conditions had not been previously reported.