The occurrence of crassulacean acid metabolism (CAM) and C₃ photosynthetic activities in Peperomia species has been linked to the differential distribution of C₃ and C₄ photosynthetic enzymes within the distinct leaf tissue layers. Our objectives were to test if relative thickness of the spongy mesophyll layer is an indication of CAM and if the distribution of water in the leaf tissue changes in response to drought. Under field conditions we studied photosynthesis and water relations of Peperomia obtusifolia and P. macrostachya, species that differ in leaf anatomy. Gas exchange and titratable acidity were measured over a complete 24 hour photoperiod. Plant water status was determined at dawn while chlorophyll a fluorescence data were collected during the day (12 noon). Thickness of the distinct leaf layers was determined with the aid of a calibrated light microscope. Gas exchange and titratable acidity showed that when well-hydrated, P. obtusifolia has typical C₃ activity and P. macrostachya has typical CAM activity with spongy mesophyll layer thickness of 26% and 76% respectively. With almost the same proportion of spongy layer, P. macrostachya was found to exhibit reduced CAM activity while P. obtusifolia switch from C₃ to CAM during the dry season. During the dry season, P. macrostachya did not show significant change in leaf osmotic potential, whereas P. obtusifolia had a significant increase at dawn, likely due to malic accumulation. Relative water content (RWC) was reduced significantly for both species during the dry season with severe reduction in P. macrostachya. Though there was a drastic reduction in RWC, no change in thickness was noticed within the water storing hydrenchyma. This, in addition to reduced CAM activity, could be an adaptation by the plant to drought. We also found that the distribution of water in the leaf tissue changes in response to drought, from the hydrenchyma to the chlorenchyma in P. obtusifolia, but not the case in P. macrostachya. Chlorophyll a fluorescence parameters Fo and qN were significantly higher during the dry season for both species, in contrast to Fv/Fm and Φ_PSII values, an indication of photoinhibition resulting from drought. Thus, under well watered and natural conditions, a thicker spongy mesophyll correlates with the presence of CAM in the species studied.