Crassulacean acid metabolism (CAM), a key adaptation of photosynthetic carbon fixation to limited water availability, is characterized by nocturnal CO2 fixation and daytime CO2 re-assimilation, which generally results in improved water-use efficiency. However, CAM plants display a remarkable degree of photosynthetic plasticity within a continuum of diel gas exchange patterns. Genotypic, ontogenetic and environmental factors combine to govern the extent to which CAM is expressed. The ecological diversity of CAM is mirrored by plasticity in a range of biochemical and physiological attributes. In C3/CAM-intermediate plants, limited water availability can induce or enhance the expression of CAM. CAM induction is controlled by a combination of transcriptional, post-transcriptional and post-translational regulatory events. Early events in CAM induction point to a requirement for calcium and calcium-dependent protein kinase activities. Gene discovery efforts, improved transformation technologies and genetic models for CAM plants, coupled with detailed physiological investigations, will lead to new insights into the molecular genetic basis of induction processes and the circadian oscillator that governs carbon flux during CAM. Future integration of genomic, biochemical and physiological approaches in selected CAM models promise to provide a detailed view of the complex regulatory dynamics involved in CAM induction and modulation by water deficit. Such information is expected to have broad significance as the ecological and agricultural importance of CAM species increases in the face of global warming trends and the associated expansion of desertification in semi-arid regions around the world.