The influences of soil water supply and atmospheric demand on transpiration were studied to gain insight into the physical mechanisms limiting forest water use within the broader context of total canopy water loss to the atmosphere. Evaporation from forests (E) can be partitioned in to four main source components: canopy transpiration (Ec), understorey transpiration (Eu), evaporation from the soil (Es), and the evaporation of intercepted water (EI). Ec and EI usually make up most of E. Ec estimated from sap flow measurements and modeled EI estimates were compared with eddy covariance measured values of E to quantify the components of the above canopy water flux to the atmosphere, in a temperate pine forest ecosystem established on a well-drained sandy plain at Turkey Point in southern Ontario, Canada. Daily values of E averaged 2.4 mm d−1 and reached maximums of 4 mm d−1 while daily values of Ec averaged 1.2 mm d−1 over the growing season. The evaporation of intercepted water (EI) was generally between 2 and 3 mm per event. EI accounted for 34% and Ec accounted for 47% (31 to 67% range on a monthly basis), together accounting for 81% of E during the growing season. Ec increased linearly with vapor pressure deficit (VPD) until a transition point was reached, after which mid-day Ec rates remained more or less constant. For analysis purposes, data were segregated by early morning VPD (or VPDin) in an attempt to characterize the atmosphere at the beginning of the daily transpiration cycle. This technique revealed that shifts in the timing and magnitude of Ec rates masked the response of Ec to changes in soil water content. Analysis also suggested that while increasing VPDs may limit maximum transpiration rates, daily total transpiration is a conservative quantity. This study improves the understanding of the physical mechanisms limiting water loss in forested ecosystems growing on water-stressed soils by investigating the effects of VPD and soil water content on Ec.