Crassulacean acid metabolism (CAM) is a CO2-concentrating mechanism selected in response to aridity in terrestrial habitats, and, in aquatic environments, to ambient limitations of carbon. Evidence is reviewed for its presence in five genera of aquatic vascular plants, including Isoe??tes, Sagittaria, Vallisneria, Crassula, and Littorella. Initially, aquatic CAM was considered by some to be an oxymoron, but some aquatic species have been studied in sufficient detail to say definitively that they possess CAM photosynthesis. CO2-concentrating mechanisms in photosynthetic organs require a barrier to leakage; e.g., terrestrial C4 plants have suberized bundle sheath cells and terrestrial CAM plants high stomatal resistance. In aquatic CAM plants the primary barrier to CO2 leakage is the extremely high diffusional resistance of water. This, coupled with the sink provided by extensive intercellular gas space, generates daytime CO2(Pi) comparable to terrestrial CAM plants. CAM contributes to the carbon budget by both net carbon gain and carbon recycling, and the magnitude of each is environmentally influenced. Aquatic CAM plants inhabit sites where photosynthesis is potentially limited by carbon. Many occupy moderately fertile shallow temporary pools that experience extreme diel fluctuations in carbon availability. CAM plants are able to take advantage of elevated nighttime CO2 levels in these habitats. This gives them a competitive advantage over non-CAM species that are carbon starved during the day and an advantage over species that expend energy in membrane transport of bicarbonate. Some aquatic CAM plants are distributed in highly infertile lakes, where extreme carbon limitation and light are important selective factors. Compilation of reports on diel changes in titratable acidity and malate show 69 out of 180 species have significant overnight accumulation, although evidence is presented discounting CAM in some. It is concluded that similar proportions of the aquatic and terrestrial floras have evolved CAM photosynthesis. Aquatic Isoe??tes (Lycophyta) represent the oldest lineage of CAM plants and cladistic analysis supports an origin for CAM in seasonal wetlands, from which it has radiated into oligotrophic lakes and into terrestrial habitats. Temperate Zone terrestrial species share many characteristics with amphibious ancestors, which in their temporary terrestrial stage, produce functional stomata and switch from CAM to C3. Many lacustrine Isoe??tes have retained the phenotypic plasticity of amphibious species and can adapt to an aerial environment by development of stomata and switching to C3. However, in some neotropical alpine species, adaptations to the lacustrine environment are genetically fixed and these constitutive species fail to produce stomata or loose CAM when artificially maintained in an aerial environment. It is hypothesized that neotropical lacustrine species may be more ancient in origin and have given rise to terrestrial species, which have retained most of the characteristics of their aquatic ancestry, including astomatous leaves, CAM and sediment-based carbon nutrition.