Field-grown trees of Alnus incana (L.) Moench, Alnus glutinosa (L.) Geartner and Betula pendula Roth displayed pronounced differences in responses of light-saturated net photosynthesis (Asat) to herbivory by the alder beetle (Agelastica alni L., Galerucinae), a specialized insect which primarily defoliates alders. We found that photosynthetic rates of grazed leaves increased following herbivory in Alnus but not in Betula. Area- and mass-based Asat of grazed leaves declined linearly with increasing amount of leaf perforation in B. pendula, by as much as 57%. By contrast Alnus glutinosa and Alnus incana increased area-based rates of Asat by 10–50% at all levels of leaf grazing. Given increased Asat in the remaining portion of grazed leaves, a net reduction in photosynthesis per leaf occurred only when the proportion of leaf area grazed exceeded 40% for Alnus incana and 23% for Alnus glutinosa. Since vein perforation by Agelastica alni was observed much more frequently in leaves of Betula than in Alnus, we hypothesized that declining Asat in herbivorized Betula was related to this disruption of water transport. A field experiment with artificial leaf perforation demonstrated a greater decline in Asat in vein-perforated Betula leaves than perforated leaves with midrib veins intact. However, regardless of leaf perforation regime, birch never showed post-perforation increases in Asat. In all species, rates of transpiration of grazed leaves linearly increased and water-use efficiency decreased with increased amount of leaf perforation. In grazed Alnus incana leaves, increasing leaf area consumption by Agelastica alni resulted in an increase of total phenols, a reduction in starch content and no changes in nitrogen concentration in the remaining portion. The increase in photosynthesis in Alnus incana might be related to declining leaf starch concentration or increasing stomatal conductance, but was unrelated to leaf nitrogen concentration. These gas exchange and leaf chemistry measurements suggest that in contrast to B. pendula, Alnus incana and Alnus glutinosa, which are the major host species for Agelastica alni, possess leaf-level physiological adaptations and defence mechanisms which can attenuate negative effects of herbivory by the alder leaf-beetle.