Research was conducted to investigate how energy balance of bark mulch and turf surfaces influence gas exchange and growth of recently transplanted trees. On several occasions over a 3-year period, stomatal conductance and leaf temperature were measured throughout the day on `Emerald Queen' Norway maple (Acer platanoides L.) and `Greenspire' littleleaf linden (Tilia cordata Mill.) trees growing over each surface. Tree water loss was estimated using a general transport flux equation applied to the tree crown apportioned between sunlit and shade layers. Microclimate variables were measured over each surface with a permanent weather station. Tree growth data were collected at the end of each growing season. Soil heat flux data revealed that a greater portion of incoming radiation was prevented from entering the soil below mulch than below turf. Due to this insulating effect, and consequent lack of evaporative cooling, mulch surface temperature was greater, and emitted more longwave radiation, than turf. Leaves over mulch intercepted more longwave radiation, had greater leaf temperature, and greater leaf-to-air vapor pressure difference than leaves over turf. As a result, leaves over mulch had greater stomatal closure than leaves over turf. Estimated tree water loss varied between surface treatments and with climatic conditions. Trees over turf had greater shoot elongation and leaf area than trees over mulch. These data suggest that gas exchange and growth of recently transplanted trees in an arid climate may be reduced if planted over nonvegetative, urban surfaces.