Water scarcity is one of the most detrimental effects on crop yield.We studied the effect of water stress on carbon acquisition and allocation to monoterpenes of commercial importance in spearmint and rosemary plants. Increasing levels of water stress reduced photosynthesis and plant biomass. Under increasing water-stress levels photosynthesis was limited by low CO2 availability due to reduced stomatal and mesophyll conductance, while photochemical and biochemical processes were not affected. At the balsamic period, significantly higher amounts of monoterpenes per unit mass were formed in water-stressed leaves with respect to irrigated controls. However, because of plant biomass reduction, water stress reduced the total yield of monoterpenes. Appropriate irrigation strategies may, therefore, potentially improve yield of monoterpenes in field grown spearmint and rosemary crops.