1. Dwarf stands of the mangrove Rhizophora mangle L. are extensive in the Caribbean. We fertilized dwarf trees in Almirante Bay, Bocas del Toro Province, north-eastern Panama with nitrogen (N) and phosphorus (P) to determine (1) if growth limitations are due to nutrient deficiency; and (2) what morphological and/or physiological factors underlie nutrient limitations to growth. 2. Shoot growth was 10-fold when fertilized with P and twofold with N fertilization, indicating that stunted growth of these mangroves is partially due to nutrient deficiency. 3. Growth enhancements caused by N or P enrichment could not be attributed to increases in photosynthesis on a leaf area basis, although photosynthetic nutrient-use efficiency was improved. The most dramatic effect was on stem hydraulic conductance, which was increased sixfold by P and 2-5-fold with N enrichment. Fertilization with P enhanced leaf and stem P concentrations and reduced C:N ratio, but did not alter leaf damage by herbivores. 4. Our findings indicate that addition of N and P significantly alter tree growth and internal nutrient dynamics of mangroves at Bocas del Toro, but also that the magnitude, pattern and mechanisms of change will be differentially affected by each nutrient.