Water deficit is the commonest environmental stress factor limiting plant productivity. The ability of plants to tolerate water deficit is determined by multiple biochemical pathways that facilitate retention and/or acquisition of water, protect chloroplast functions, and maintain ion homeostasis. Essential pathways include those that lead to synthesis of osmotically active metabolites and specific proteins that control ion and water flux, support scavenging of oxygen radicals, or may act as chaperones. The ability of plants to detoxify radicals under conditions of water deficit is probably the most critical requirement. Many stress-tolerant species accumulate methylated metabolites, which play a crucial dual role as osmoprotectants, and as radical scavengers. Their synthesis is correlated with stress-induced enhancement of photorespiration. However, transfer of individual genes from tolerant plants only confers marginally increased water-stress tolerance to stress-sensitive species: tolerance engineering will probably require the transfer of multiple genes.