Eucalyptus grandis plantations in Brazil are among the most productive forests of the world, reaching mean annual increments of about 50 m3/ha/yr over short (6 yr) rotations. Carbon, water, and nutrients budgets in one of these plantations were investigated through continuous eddy-covariance measurements of water vapor and CO2 fluxes over a 5-yr period encompassing two successive rotations (2 yr before and 3 yr after harvesting and replanting), with measurements of water table depth, soil water content to a depth of 10 m, and concentrations of nutrients in soil solutions. Before clearcutting, fine roots were found to a depth of 16 m. No seepage occurred below 5 m. Actual evapotranspiration (AET) was approximately equal to annual precipitation (1350 mm). Clearcutting resulted in a strong decrease in AET, a recharge of deep soil layers, and a rise in the water table. By the third year after replanting, the rapid increase in AET supported by the fast expansion of roots led to soil water depletion to a depth of 10 m. Clearcutting turned the forest from a strong C sink (net ecosystem productivity of about 1 tonne C/ha/month) into a C source, but the plantation turned back to a C sink from 7 months after replanting onwards.