Plants from arid environments have some of the most diverse morphological and anatomical modifications of any terrestrial plants. Most perennials are classified as xerophytes, and have structures that limit water loss during dry weather, provide structural support to help prevent cell collapse during dry periods or store water in photosynthetic tissues. Some of these traits are also found in sclerophyllous plants and traits that may have developed due to evolution of taxa on nutrient poor soils may also benefit the plants under arid conditions. We examined the morpho-anatomical features of photosynthetic organs of three tree and four shrub species with reduced leaves or photosynthetic stems that occur in arid or semiarid sites in Australia to see if there were patterns of tissue formation particularly associated with xeromorphy. In addition, we reviewed information on succulent and resurrection species. In the tree species (Callitris spp.) with decurrent leaves clothing the stems, the close association between the water transport system and stomata, along with anisotropic physiology would allow the species to fix carbon under increasingly dry conditions in contrast to more broad-leaved species. The shrub species (Tetratheca species and Glischrocaryon flavescens) with photosynthetic stems had extensive sclerenchyma and very dense chlorenchyma. The lack of major anatomical differences between leafless species of Tetratheca from arid areas compared with more mesic sites indicates that quite extreme morphological modifications may not exclude species from growing successfully in competition with species from less arid areas. The sclerophyll flora now characteristic of Australian vegetation from seasonally arid climates may have evolved during mesic times in the past but with relatively minor modifications was able to adjust to the gradually drying climate of much of Australia up to the present time.