Elevated atmospheric CO2 concentration (eCa) might reduce forest water‐use, due to decreased transpiration, following partial stomatal closure, thus enhancing water‐use efficiency and productivity at low water availability. If evapotranspiration (Et) is reduced, it may subsequently increase soil water storage (ΔS) or surface runoff (R) and drainage (Dg), although these could be offset or even reversed by changes in vegetation structure, mainly increased leaf area index (L). To understand the effect of eCa in a water‐limited ecosystem, we tested whether 2 years of eCa (~40% increase) affected the hydrological partitioning in a mature water‐limited Eucalyptus woodland exposed to Free‐Air CO2 Enrichment (FACE). This timeframe allowed us to evaluate whether physiological effects of eCa reduced stand water‐use irrespective of L, which was unaffected by eCa in this timeframe. We hypothesized that eCa would reduce tree‐canopy transpiration (Etree), but excess water from reduced Etree would be lost via increased soil evaporation and understory transpiration (Efloor) with no increase in ΔS, R or Dg. We computed Et, ΔS, R and Dg from measurements of sapflow velocity, L, soil water content (θ), understory micrometeorology, throughfall and stemflow. We found that eCa did not affect Etree, Efloor, ΔS or θ at any depth (to 4.5 m) over the experimental period. We closed the water balance for dry seasons with no differences in the partitioning to R and Dg between Ca levels. Soil temperature and θ were the main drivers of Efloor while vapour pressure deficit‐controlled Etree, though eCa did not significantly affect any of these relationships. Our results suggest that in the short‐term, eCa does not significantly affect ecosystem water‐use at this site. We conclude that water‐savings under eCa mediated by either direct effects on plant transpiration or by indirect effects via changes in L or soil moisture availability are unlikely in water‐limited mature eucalypt woodlands.