In habitats with low water availability, a fundamental challenge for plants will be to maximize photosynthetic C-gain whilst minimizing transpirational water-loss. This tradeoff between C-gain and water-loss can in part be achieved through the coordination of leaf-level photosynthetic and hydraulic traits. To test the relationship of photosynthetic C-gain and transpirational water-loss we grew under common growth conditions 18 C₄ grasses adapted to habitats with different mean annual precipitation (MAP) and measured leaf-level structural and anatomical traits associated with mesophyll conductance (g_m) and leaf hydraulic conductance (K_leaf). The C₄ grasses adapted to lower MAP showed greater mesophyll surface area exposed to intercellular air spaces (S_mes) and adaxial stomatal density (SD_ada) which supported greater g_m. These grasses also showed greater leaf thickness and vein-to-epidermis distance which may lead to lower K_leaf. Collectively, these leaf traits associated with g_m and K_leaf scaled positively with photosynthetic rates (A_net) and leaf-level water-use efficiency (WUE) with low MAP adapted grasses exhibiting greater A_net and WUE. In summary, we identify a suite of leaf-level traits that appear important for adaptation of C₄ grasses to habitats with low MAP and may be useful to identify C₄ species showing greater A_net and WUE in drier conditions.