1. Climate change scenarios forecast rising temperatures for the Mediterranean region, which could enhance vulnerability to drought stress in forest ecosystems. The long-term effects of climate forcing on tree performance can be, however, modulated by other environmental factors, such as competition and rising atmospheric CO2 concentrations. 2. We assessed the concomitant effect of competition, climate and CO2 concentrations on the tree-ring δ13C-derived intrinsic water-use efficiency (iWUE) and basal area increments (BAI) of species with different drought tolerance: two Mediterranean deciduous species (Quercus faginea Lam. and Quercus pyrenaica Willd.) and one conifer (Pinus sylvestris L.). Additionally, given that competition may be managed to mitigate the effect of increasing drought stress, we further examined the influence of this variable on iWUE and growth using data compiled from the literature, providing the first review on the response of iWUE to competition. 3. Competition had no significant effect on iWUE in any of the three species studied, whereas, as expected, growth rates were significantly higher under low competition levels. This was consistent with the literature review, which showed that shifts in iWUE with competition changes are rare; supporting the hypothesis that leaf-level gas exchange tends to be a homeostatic trait. In the long term, the three species exhibited a significant increasing trend in iWUE due to the combined effect of increased CO2 concentration, climate and age. Growth, however, was mostly affected by competition and climate and in most cases was not enhanced as a result of the increase in iWUE. 4. Synthesis. Regardless of their functional response to drought, trees respond to reduced competition through structural shifts such as increased radial growth rather than leaf-level gas exchange adjustments. CO2 and climate are, therefore, the main drivers of iWUE variability, rather than competition. Thus, if temperature-induced drought becomes limiting, reducing competition for resources may not offset the detrimental effect of increasing drought stress on tree physiology and growth decline may occur without a CO2 fertilization effect.