We report on the interannual variability of evapotranspiration (E) and energy exchange of an annual grassland in the Mediterranean climate zone of California. They were measured directly with the eddy covariance technique over a 6-year period that spanned between July 2001 and June 2007 and experienced a large range in precipitation (376 mm to 888 mm). Despite a two-fold range in precipitation, annual E ranged much less, between 266 mm and 391 mm. We found that pronounced energy-limited and water-limited periods occurred within the same year. In the water-limited period, monthly integrated E scaled negatively with solar radiation and was restrained by precipitation. In the energy-limited period, on the other hand, the majority of Escaled positively with solar radiation (Rg) and was confined by potential E (Ep). E was most sensitive to the availability of soil moisture during the transition to the senescence period rather than onset of the greenness period, causing annual E to be strongly modulated by growing season length. Bulk surface conductance scaled consistently with Priestley-Taylor α coefficient regardless of interannual and seasonal variability of precipitation, E, and solar radiation.