The hypothesis that rates of carbon exchange and recovery following dehydration by Antarctic bryophytes are related to habitat water availability was investigated. Carbon fixation was measured using an infra-red gas analysis system. As the water content of the bryophytes was reduced, respiration rates fell less quickly than those for gross photosynthesis. As a result, net photosynthesis moved from positive to negative, before tending to zero. Xeric species maintained a greater percentage of their photosynthetic capacity at reduced water contents than hydric species, although this trend was not reflected in terms of absolute carbon fixation. Comparison of the experimental observations with measurements of field water contents suggested that water contents of hydric and mesic species remained above those required to maintain maximal rates of photosynthesis through most of the growing season, whereas photosynthesis by xeric species was often water-limited. Recovery following rehydration demonstrated the typical bryophyte resaturation respiration burst and slower recovery of photosynthesis. Times taken to reach the compensation point were generally longer than those reported for non-polar species. Recovery was faster in xeric than in hydric species, although there was no correlation with the final degree of recovery. The results partially support the hypothesis tested, and provide a basis for the inclusion of water content and desiccation events in models of Antarctic bryophyte productivity.