In this review, we discuss the evolution of xylem structure in the context of our current understanding of the biophysics of water transport in plants. Water transport in land plants occurs while water is under negative pressure and is thus in a metastable state. Vessels filled with metastable water are prone to dysfunction by cavitation whenever gas-filled voids appear in the vessel lumen. Cavitated vessels fill with air and are incapable of water transport until air bubbles dissolve. We know much more about how cavitations occur and the conditions under which air bubbles (embolisms) dissolve. This gives us an improved understanding of the relationship between xylem structure and function. We argue that the efficiency of water transport increases in vessels with increasing diameter. The vulnerability of large diameter vessels to frost-induced embolism is dramatically increased. Thus there is a selection for small diameter vessels in cold climates. The relationship between vessel diameter and vulnerability of large diameter vessels to drought-induced embolism is much weaker. The correlation is too weak to permit comparative physiologists to predict vulnerability based on vessel diameter, but the correlation is strong enough to be of some evolutionary significance.