Abstract A series of vegetation changes take place in tropical ecosystems during the Pennsylvanian Subperiod. The most notable change, recognizable from palynology and plant macrofossils at the Middle and Late Pennsylvanian boundary in the Illinois Basin, is the extirpation, or local extinction, of certain lineages of arborescent lycopsids, followed by their replacement by stem group marattialean tree ferns. The leading hypothesis suggests a significant change in precipitation regime as the cause. To test this hypothesis, we examine the vascular anatomy and physiology of key lineages of Pennsylvanian plants: the sphenopsids, tree ferns, cordaitaleans, medullosans, lycophytes and extrabasinal stem group coniferophytes. Using scanning electron and light microscopy of fossilized anatomy, we provide new data on these plants’ vascular systems, quantifying their physiological capacity and drought resistance. We find that three Pennsylvanian plant lineages – the medullosans, arborescent lycopsids and Sphenophyllum – contain high hydraulic conductivity but are vulnerable to drought-induced damage, whereas others are resistant, including stem group tree ferns and coniferophytes. Relative abundance changes among these plants were likely driven by drought, and differences in water use efficiency would have amplified drought events as plant communities changed. The interaction of physiological selectivity and positive feedback between aridity and drought tolerance likely played a significant role in Late Paleozoic floral changes.