We examined physiological features related to water balance in five replicate populations of Drosophila melanogaster that have undergone selection for enhanced resistance to desiccation (D populations) and in five replicate control (C) populations. Adult D flies contain 34 % more water than the control flies. We examined two hypotheses for increased water acquisition in the D flies: (i) that they accumulate more water early in development and (ii) that they have a reduced post-eclosion diuretic water loss. We found no evidence of differential water or dry mass acquisition between the C and D populations prior to adulthood. We also found no evidence of differential post-eclosion diuresis, i.e. both C and D groups showed insignificant changes in water volume in the 4 h period immediately after eclosion. In addition, we quantified water content in the intra- and extracellular compartments of the C and D populations and were able to identify the hemolymph as the primary storage site of the 'extra' water carried by the desiccation-resistant flies. We estimated that 68 % of the increased water volume observed in the D flies was contained in the hemolymph. Desiccation-resistance was strongly correlated with hemolymph volume and only weakly with intracellular water volume. Survival during desiccation was also strongly related to the carbohydrate content of the D flies. It has been presumed that the D flies accumulate carbohydrate primarily as intracellular glycogen, which would result in a significant increase in intracellular water volume. We found that carbohydrate content was weakly correlated with intracellular water volume and more strongly with hemolymph volume. The carbohydrate pool in the D flies may, therefore, be contained in the extracellular compartment as well as in cells. These results are suggestive of the importance of modifications in hemolymph volume and hemolymph solute concentrations in the evolution of enhanced desiccation-tolerance in populations of Drosophila melanogaster.