The impact of climate change on the physiological processes of Norway spruce in Central Europe is a significant concern. The increased temperature and evaporative demand associated with climate change may negatively affect its photosynthesis and carbon-water balance. This study tests the combined effect of branch position, temperature (T) and water vapour pressure deficit (VPD) on net photosynthetic rate (P_N), water vapour stomatal conductance (g_s), and intrinsic water-use efficiency (WUE_i) of Norway spruce. More than 11 000 gas-exchange measurements during the summer of 2018 revealed that branch position significantly affects gas exchange and WUE_i of juvenile Norway spruce trees. Northern branches showed on average 21% increased P_N, 35% higher g_s, and 8% lower WUE_i compared to the southern branches (across T and VPD conditions). The P_N and g_s differences between the branches were temperature-and VPD-dependent. We observed the negative impact of raising temperature on gas exchange and WUE_i for both treatments, with a 40°C threshold causing a rapid decline in WUE_i. Variability of the southern branches' WUE_i at 42°C was abruptly increased due to the decoupling of P_N and g_s (low P_N, high g_s). Surprisingly, raising VPD showed no significant impact on WUE_i of Norway spruce. The results of this study provide necessary information for upscaling and process-based modelling of whole-crown gas exchange. Moreover, experimental studies of gas exchange should take into consideration the branch position effect to prevent possible bias errors.