Background: Understanding how trees respond to drought is critical to forecasting both short and long-term impacts of climate change on forests. The isotopic ratio of C-13 to C-12 stored in wood - referred to as delta C-13 - is widely used as an indicator of plant water status. Yet whether changes in delta C-13 linked to drought are also associated with declines in annual carbon assimilation and allocation to stem growth remains unclear. Methods: Here we used tree ring data from over 3000 trees - representing 26 populations of 16 common European tree species sampled at six locations that span more than 20 degrees in latitude - to test whether drought induces coordinated changes in carbon isotope ratios and stem basal area increments (BAI). Results: We found that delta C-13 is a reliable indicator of drought across a wide range of species and environmental conditions. All but one of the populations sampled in this study showed a statistically significant increase in delta C-13 under drought conditions. However, when considering the effects of these same drought events on BAI, we found no evidence to suggest that increases in delta C-13 were coupled with significant declines in stem growth. While BAI was 11.9% lower on average in drought years, this decline in BAI was not significant when analysed across species. In fact, only seven of the 26 populations we sampled exhibited significant declines in BAI under drought conditions - four of these from a single study site in the Carpathian Mountains of Romania. Conclusions: While delta C-13 responded strongly and consistently to drought across a diverse group of tree species and environmental conditions, we found that most tree species were able to sustain growth even under conditions of low soil water availability. Consequently, while delta C-13 provides a powerful indicator of past drought occurrence, by themselves carbon isotope ratios tell us little about how carbon sequestration and allocation to wood are affected by conditions of low water availability across Europe's forests.