Pepper (Capsicum annuumL.) plants with and without the VA‐mycorrhizal fungusGhmus deserticolaTrappe. Bloss and Menge (VAM and NVAM. respectively), were drought acclimated by four drought cycles (DA) or kept well watered (NDA). All plants were then subjected to an additional drought followed by a 3‐day irrigation recovery period. Measurements of water relations, gas exchange and carbohydrates were made at selected intervals throughout the drought cycles and recovery. To equalize growth and avoid higher P in VAM plants. NVAM plants received higher P fertilization. Consequently, similar transpirational surface and shoot mass were achieved in all treatments, but NVAM had a higher tissue P concentration than VAM plants. Plants that were either VAM or DA, but especially the VAM‐DA plants, tended to be high in net photosynthetic flux (A), A per unit of tissue P concentration (A/P), stomatal conductance (g) or leaf turgor (Ψp) during high environmental stress or recovery from stress. During this time, NVAM‐NDA plants had low A. A/P and leaf chlorophyll, but high soluble carbohydrate concentrations in their leaves. All VAM and DA plants had some osmotic adjustment compared to the NVAM‐NDA plants, but VAM‐DA plants had the most. Osmotic adjustment was not due to accumulation of soluble carbohydrate. The high turgor, A and g in the VAM‐DA plants during and following environmental stress indicated superior drought resistance of these plants; however, osmotic adjustment was only apparent during recovery and cannot account for the observed drought resistance during environmental stress. Drought resistance of VAM‐DA plants was not attributable to high leaf P concentration or confounded by differences in plant transpi