Water relations of nutrient-poor calcareous grassland under long-term CO2 enrichment were investigated. Understanding CO2 effects on soil moisture is critical because productivity in these grasslands is water limited. In general, leaf conductance was reduced at elevated CO2, but responses strongly depended on date and species. Evapotranspiration (measured as H2O gas exchange) revealed only small, non-significant reductions at elevated CO2, indicating that leaf conductance effects were strongly buffered by leaf boundary layer and canopy conductance (leaf area index was not or only marginally increased under elevated CO2). However, these minute and non-significant responses of water vapour loss accumulated over time and resulted in significantly higher soil moisture in CO2-enriched plots (gravimetric spot measurements and continuous readings using a network of time-domain reflectometry probes). Differences strongly depended on date, with the smallest effects when soil moisture was very high (after heavy precipitation) and effects were largest at intermediate soil moisture. Elevated CO2 also affected diurnal soil moisture courses and rewetting of soils after precipitation. We conclude that ecosystem-level controls of the water balance (including soil feedbacks) overshadow by far the physiological effects observed at the leaf level. Indirect effects of CO2 enrichment mediated by trends in soil moisture will have far-ranging consequences on plant species composition, soil bacterial and faunal activity as well as on soil physical structure and may indirectly also affect hydrology and trace gas emissions and atmospheric chemistry.