A New Zealand temperate pasture is currently exposed to either ambient air or air enriched to 475 µbar CO2 using free-air CO2 enrichment (FACE) technology. Sheep graze the site regularly, which results in heterogeneity in nutrient return. To investigate leaf photosynthetic responses, leaf gas exchange characteristics and nitrogen (N) content were measured in two consecutive years in spring under standard conditions on Lolium perenne L. andTrifolium subterraneum L. and on Trifolium repensL. and Paspalum dilatatum Poir. in the second year only. Leaves of the three C3 species growing under FACE conditions had lower (up to 37% in 1998 and 22% in 1999) photosynthetic rates than leaves growing under ambient conditions, when measured at the same standard conditions of high light and 360–380 µbar CO2. Differences in photosynthetic rates were correlated with leaf N content and stomatal conductance when measured under these conditions. There was no difference in photosynthetic capacities between ambient or FACE grown P. dilatatum, a C4 grass. Photosynthetic N use efficiency (A/N) differed among species. For the C3 species A/N was on average 25% greater under FACE conditions and L. perenne had the highest (240 µmol CO2 mol N–1 s–1) and T. repens the lowest A/N (142µmol CO2 mol N–1 s–1) under ambient CO2 partial pressure [p(CO2)]. A/N of L. perenne was similar to that of P. dilatatum measured under ambient p(CO2) but 21% greater under FACE conditions. In the second year, leaf stable carbon isotope compositions (δ13C) were determined for P. dilatatum, L. perenne and T. repens to assess long-term responses of leaf transpiration efficiency. Using the difference in ‰ δ13C between ambient and FACE-grown P. dilatatum as a reference to difference in ‰ δ13C in ambient and FACE air, we concluded that the ratio of leaf intercellular to ambient p(CO2) (Ci/Ca) was similar between FACE and ambient grown L. perenne and T. repens.