Brown stem rot (BSR), caused by Phialophora gregata, is a vascular disease of soybean. Symptoms include browning of vascular tissue and pith, and interveinal chlorosis and necrosis in leaves. Effects of BSR on soybean water relations, photosynthesis, growth, and yield were evaluated using a resistant (BSR 201) and a susceptible (Pride B216) cultivar. Plants were greenhouse-grown and injection-inoculated with viable or nonviable spore suspensions at vegetative stage 1;A significant amount of disease developed in both cultivars, but Pride B216 was more severely diseased and more highly stressed by the disease than BSR 201. Stem conductance was reduced, and stomatal conductance was increased in both inoculated cultivars compared to uninoculated plants. Transpiration was increased more in Pride B216 than in BSR 201, and photosynthesis was significantly increased in BSR 201 plants when inoculated. Disease-caused water stress was attributed to a combination of reduced stem conductance and increased water loss resulting from increased stomatal conductance;Disease significantly reduced leaf area, branching, number of nodes and leaves, number and weight of pods and seeds per plant, number of full-seeded pods, and number of seeds per pod in both cultivars. Single seed weight of Pride B216 was significantly reduced by BSR in one experiment. Disease-associated yield loss resulted from reduction in seed number and, to a lesser extent, reduction in seed size;Disruption of water relations by BSR may reduce yield by limiting photosynthetic leaf area and by increasing seed abortion. In addition to inhibiting stem colonization by P. gregata, the resistant cultivar was not affected physiologically to the same extent as the susceptible cultivar. However, the relative importance of restriction of P. gregata and plant tolerance to disease remains unclear. Further work is needed to determine varietal responses at comparable disease severities.