Ecohydrological models consider the relationship between tree size and structure (especially leaf area index) and water use but generally treat herbivory as a source of unwanted noise in the data. Little is known of how insect damage to leaves influences whole-plant water use in trees. Water use is driven by environmental demand and the total leaf area through which transpiration can occur, but the effects of insects are expected to be complex. Different kinds of insects could have different effects; for example, chewing insects reduce leaf area, whereas sucking and tissue mining insects reduce leaf function without reducing area. Further, plants respond to herbivory in a range of ways, such as by altering leaf production or abscising leaves. We examined the effect of insects on Eucalyptus blakelyi in a woodland near Canberra, Australia, using sap flow velocity as a measure of whole-plant water use. We applied insecticide to 16 trees matched to an untreated control group. After 6 months, we examined the effects on sap flow velocity and crown condition. There was a general increase in sap flow velocity as trees produced leaves over the growing season, but the increase in sap flow for trees without insecticide protection was half that of the protected trees (increase: 4.4 vs. 9.0 cm/h, respectively). This dramatic effect on sap flow was consistent with effects on crown condition. Unprotected trees had 20% less leaf mass per unit stem in the crown. In addition, unprotected trees had a 20% greater loss of leaf functional area from necrosis. It should be noted that these effects were detected in a year in which there was not an outbreak of the psyllids (Homoptera) that commonly cause severe leaf damage to this tree species. It is predicted that the effect in a psyllid outbreak year would be even more substantial. This result underscores the significant impact that insect herbivores can have on an ecological process of significance to the ecosystem, namely, the movement of water from the soil to the atmosphere.