Drought stress is often a feature of limestone areas, making it difficult for plants to grow well. Therefore it is important to find drought-adapted species for vegetation restoration in limestone areas. Cajanus cajan is a nitrogen-fixing shrub that was introduced to some limestone areas such as Guangxi and Guizhou provinces of China. Mahonia fortunei, a non-nitrogen-fixing shrub, is a predominant species in the Chongqing region. The diurnal and seasonal variations of gas exchange and leaf N content of the two species were compared in order to understand their adaptive ability with respect to the limestone habitat. Net photosynthetic rate (Pn), transpiration (E), stomatal conductance (Gs) and light use efficiency (LUE) in leaves of C. cajan were higher than in leaves of M. fortunei, while both species showed midday photosynthetic depression. The results for stomatal conductance (Gs) and intercellular concentration (Ci) indicated that the photosynthetic depression was caused by stomatal limitation in C. cajan while the depression of Pn in M. fortunei was predominantly due to non-stomatal limitation. However, water use efficiency (WUE) in leaves of C. cajan was lower than in leaves of M. fortunei. The seasonal variations of chlorophyll a, chlorophyll b and chlorophyll (a+b) content of both species showed the same trends as the seasonal variations of Pn. The contents of chlorophyll a, chlorophyll b and chlorophyll (a+b) in leaves of C. cajan had a peak in August and then declined while for M. fortunei, besides a peak in August, there was another peak in October. The chlorophyll a/b ratio in leaves of C. cajan declined with the months passing, whilst that in leaves of M. fortunei increased. The net photosynthetic rates of both species were positively correlated with their chlorophyll contents. The leaf N content of C. cajan was 37.6 mg/g, much higher than that of M.fortunei (14.8 mg/g), implying that the nitrogen-fixing capacity of the former causes its high photosynthetic capacity. However, because of its lower WUE, C. cajan has a disadvantage in drought conditions in limestone areas. Water-related physiological characteristics should be studied further in order to understand completely whether it can be adapted well to such conditions.