Photosynthesis and dry matter production are essential for guaranteeing the external quality of ornamental plants. Water is the important factor affecting plant photosynthesis and dry matter production. The aim of this study was to quantitatively investigate the effects of water on photosynthesis and dry matter production of Lilium. For this purpose, experiments of Lilium ‘Sorbonne’ with three planting dates and four levels of water treatment were conducted in a greenhouse in Naijing from March 2009 to January 2010. During each planting date, the four levels of water treatment were, respectively, -4—10 kPa, -10—15 kPa, -15—25 kPa and -25—40 kPa. The plot of an area of 0.8 m² for each water treatment with three replicas was arranged in a randomized block design. In each water treatment, substrate water potential at 0.1 m below the substrate surface was monitored using tension meters (with 3 replicas). When the substrate water potential reached its designed lower limit value, the crops were irrigated until reaching the designed upper limit value. Substrate water potential at 0.1 m below the substrate surface and the corresponding gravimetric soil water content were measured to establish the substrate water potential and gravimetric water content relationship curve. This curve was then used to determine the amount of water required for irrigation in each treatment. Photosynthetically active radiation and air temperature above the canopy inside the greenhouse were monitored automatically every 10 s and the half-hourly averaged data were recorded using a datalogger (CR1000; Campbell Scientific Inc.). During each experiment, leaf net photosynthesis rate of the 1st-3th leaves (counting from the top downward) were measured using the photosynthesis system (LI-COR 6400; LI-COR Inc), and 3 plants in each plot were sampled to measured leaf area index and plant dry weight at different development stages. Based on the experimental data, effects of substrate water potential on the dynamics of leaf photosynthesis rate and leaf area index were quantified. These quantitative relationships were then integrated into a photosynthetically driven dry matter production model to predict the effects of substrate water potential on dry matter production of cut lily. Independent experimental data were used to validate the model. The results showed that leaf photosynthesis rate, leaf area index and plant dry matter production decreased significantly when substrate water potential is below -15 kPa. Therfore, the critical substrate water potential for the normal growth of cut lily was determined as -15 kPa. Comparison between the simulated and measured results showed that the coefficient of determination (r²) between the simulated and the measured values of leaf area index, the maximal leaf gross photosynthesis rate and the dry matter mass were 0.97, 0.96, 0.94, respectively; and the relative root mean square error (rRMSE) between the simulated and the measured values of leaf area index, the maximal leaf gross photosynthesis rate and the dry matter mass were 7.12%, 4.37%, 11.14%, respectively. The model developed in this study gives satisfactory predictions of the maximal leaf gross photosynthesis rate and the dry matter production of cut lily, hence, can be used for optimizing water management for cut lily production.