Hydraulic conductivity (K) in the soil and xylem declines as water potential (Ψ) declines. This results in a maximum rate of steady-state transpiration (Ecrit) and corresponding minimum leaf Ψ (Ψcrit) at which K has approached zero somewhere in the soil–leaf continuum. Exceeding these limits causes water transport to cease. A model determined whether the point of hydraulic failure (where K = 0) occurred in the rhizosphere or xylem components of the continuum. Below a threshold of root:leaf area (AR:AL), the loss of rhizosphere K limited Ecrit and Ψcrit. Above the threshold, loss of xylem K from cavitation was limiting. The AR:AL threshold ranged from > 40 for coarse soils and/or cavitation-resistant xylem to < 0·20 in fine soils and/or cavitation-susceptible xylem. Comparison of model results with drought experiments in sunflower and water birch indicated that stomatal regulation of E reflected the species’ hydraulic potential for extracting soil water, and that the more sensitive stomatal response of water birch to drought was necessary to avoid hydraulic failure. The results suggest that plants should be xylem-limited and near their AR:AL threshold. Corollary predictions are (1) within a soil type the AR:AL should increase with increasing cavitation resistance and drought tolerance, and (2) across soil types from fine to coarse the AR:AL should increase and maximum cavitation resistance should decrease. Key-words: drought responses; hydraulic conductance; rhizosphere conductance; root–shoot ratio; soil–root interface; water relations; water transport; xylem cavitation.