Experiments were performed to determine whether the fungal component of the lichen thallus might enable the algal component to function under conditions of moisture stress at which it would be unable to function if free-living. Four lichens were used: Lepraria membranacea Ach., Cladonia submitis Evans, Usnea substerilis Mot. and Letharia vulpina (L.) Hue, collected from diverse geographical locations. Moisture stress was quantified using the water potential concept, and water potential was controlled both osmotically and matrically. The function of the alga was evaluated by measuring photosynthesis with a (14)C technique. Photosynthesis of whole and ground lichen thalli was measured at different water potentials. Lowest water potentials permitting photosynthesis by whole lichen thalli ranged from-56 to-307 bar, and lowest potentials for the separated algal component ranged from-7 to-145 bar. In all cases the alga was able to photosynthesize at lower water potentials within the lichen thallus than when liberated. The grinding process did not harm the alga. It is suggested that one function of stored carbohydrate in the lichen fungus may be to increase internal osmotic pressure sufficiently so that the fungus thallus can absorb moisture from atmospheres of reduced humidity. If water secretion then occurred, some of this moisture could be made available to the alga.