The objective of this study was to elucidate the response and adaptation mechanisms of Cinnamomum migao seedlings to drought stress. Using pot experiments, we examined the effects of three relative water levels on the growth of 1-year-old C. migao seedlings by measuring photosynthetic physiological indices and light responses under drought stress. The responses were analyzed in terms of four different light response curve models:rectangular hyperbola, non-rectangular hyperbola, exponential, and modified rectangular hyperbola. The following results were obtained. (1) According to the values of photosynthetic parameters calculated using the four models, the rectangular hyperbola, non-rectangular hyperbola, and exponential models were suitable for low photosynthetically active radiation. However, only the modified rectangular hyperbola model provided a good fit for each treatment and the fitting parameters were more accurate. (2) The apparent quantum efficiency (Φ) of photosynthesis of drought-stressed plants was smaller than that of normal plants, and therefore the utilization efficiency of these plants is lower. (3) The net photosynthetic rate (P_n) of severely stressed C. migao plants decreased significantly under strong photosynthetically active radiation, whereas values for the net photosynthetic rate (P_n), maximum net photosynthetic rate (P_nmax), and light compensation point were the highest under conditions of moderate stress. C. migao has a wide range of stress tolerance. Under severe stress, P_n, P_nmax, and LSP decreased, and transpiration rate (T_r) and stomatal conductance (G_s) decreased more significantly; however, the plants still had a higher water-use efficiency. Although C. migao plants suffer damage under severe drought stress, they can adjust to the adverse environments through physiological modification and by reducing damage to their photosynthetic apparatus. (4) In order to facilitate growth and developmental adaptation in C. migao during management, it is recommended that the soil moisture content be maintained at levels between 23.05% and 14.92%.