The monsoonal areas of northern Australia experience extreme seasonal variations in rainfall, with an annual dry season of 7 months or more. Seasonal changes in leaf water relations were investigated for saplings of two tree species common in northern Australian savannas: Eucalyptus tetrodonta F.Muell, an evergreen, and Terminalia ferdinandiana Excell, which is deciduous. Saplings may experience more severe water stress than mature trees because their root systems are less extensive. This study found a positive correlation between pre-dawn leaf water potential and tree height during the dry season, but not during the wet season, for both E. tetrodonta and T. ferdinandiana trees. Pressure–volume curves were constructed for leaves of E. tetrodonta saplings at 2-monthly intervals throughout the year. Osmotic potential at full turgor decreased from a maximum of −1.33 MPa in February (wet season) to −2.25 MPa in October (late dry season), then increased to an intermediate value of −1.71 MPa in December (early wet season). Leaves of T. ferdinandiana saplings were compared in February (wet season) and April (end of wet season; before leaf senescence). Osmotic potential at full turgor decreased from −1.18 MPa in February to −1.39 MPa in April. The capacity for turgor maintenance was larger for E. tetrodonta than for T. ferdinandiana, with osmotic potential at full turgor and the turgor loss point, relative water content at the turgor loss point and the ratio of turgid weight to dry weight all lower in E. tetrodonta.