The purpose of this study was to investigate the xylem anatomy and hydraulic characteristics of the mangrove Laguncularia racemosa grown under contrasting salinities. The study addressed the hypothesis that, at high salinity, water transport capacity may decrease in association with higher water use efficiency. Plants were grown in media to which 0, 15 and 30 NaCl was added. Vessel density and diameter were determined in transverse sections of stem and midrib leaves in terminal shoots, and hydraulic parameters were measured. In stems, the vessel density increased with salinity, while the anatomical diameter (d(a)) and hydraulic diameter (d(h)) declined; in leaves, these parameters remained unchanged with salinity. Huber value and hydraulic and specific conductivities decreased with salinity. Leaf blade resistance increased with salinity and represented the largest fraction of twig resistance. Xylem anatomy and leaf tissue of L. racemosa appeared to be modulated by salinity, which led to a coordinated decline in hydraulic properties as salinity increased. Therefore, these structural changes would reflect functional water use characteristics of leaves under salinity.