Forest thinning can be used as an adaptive measure to improve the growth and resistance of Norway spruce forests affected by climate change. The impact of different thinning intensities on sap flow, growth, and tree water deficit of 40-year-old Norway spruce was tested. High thinning intensity (–61% of basal area) resulted in increased tree-level sap flow compared to the control (+27%), but it caused a decrease in the stand-level transpiration (–34%) due to reduced leaf area index. Low-intensity thinning (–28% basal area), high-intensity thinning, and control showed similar responses of sap flow to vapour pressure deficit and global radiation, suggesting unchanged isohydric behaviour. Both low- and high-intensity treatments displayed greater radial growth than the control. There were no differences in tree water deficit between the treatments. The low-intensity treatment can be considered the best water utilisation treatment with increased growth and unchanged transpiration at the tree level. The high-intensity treatment had similar radial growth as the low-intensity but lower stand-level transpiration, implying improved soil water availability. The study expands the ecophysiological understanding of thinning as a valuable silvicultural practice for adapting forest management of Norway spruce to the effects of climate change.