The aim of this study was to provide new insights into how intraspecific variability in the response of key functional traits to drought dictates the interplay between gas-exchange parameters and the hydraulic architecture of European beech (Fagus sylvatica L.). Considering the relationships between hydraulic and leaf functional traits, we tested whether local adaptation to water stress occurs in this species. To address these objectives, we conducted a glasshouse experiment in which 2-year-old saplings from six beech populations were subjected to different watering treatments. These populations encompassed central and marginal areas of the range, with variation in macro- and microclimatic water availability. The results highlight subtle but significant differences among populations in their functional response to drought. Interpopulation differences in hydraulic traits suggest that vulnerability to cavitation is higher in populations with higher sensitivity to drought. However, there was no clear relationship between variables related to hydraulic efficiency, such as xylem-specific hydraulic conductivity or stomatal conductance, and those that reflect resistance to xylem cavitation (i.e., Ψ12, the water potential corresponding to a 12% loss of stem hydraulic conductivity). The results suggest that while a trade-off between photosynthetic capacity at the leaf level and hydraulic function of xylem could be established across populations, it functions independently of the compromise between safety and efficiency of the hydraulic system with regard to water use at the interpopulation level.