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Under recurring droughts, the southwestern U.S. loses a significant proportion of precipitation as evapotranspiration (ET), suggesting an opportunity to reduce ET via forest thinning. To better understand the potential impacts of thinning on the forest hydrologic cycle, we used sap flow sensors and Bowen ratio stations to measure ET in thinned and non-thinned ponderosa pine (Pinus ponderosa Douglas ex C. Lawson) stands in northern Arizona during the wet year of 2023, where thinning removed 42% of overstory basal area. Although our study site had experienced prolonged drought in previous years, heavy winter snowfall made 2023 a wet year. We correlated sap flow with environmental variables and used principal component analysis to identify the primary drivers of ponderosa pine water use in thinned and non-thinned stands. Results showed that after accounting for tree size, thinned stands had ~20% (~5 L day−1) higher individual-tree water use at daily and weekly temporal scales than non-thinned stands. At the stand level, thinning decreased overstory ET (OET) but increased understory ET (UET), indicating a reallocation of outgoing water fluxes in the water balance. As a result, total ET (sum of OET and UET) decreased from 584 to 516 mm year−1. In the semi-arid forest, this decrease in total ET of 68 mm year−1 (~12% reduction) indicates an ecohydrologically meaningful outcome of forest thinning. In both stands, tree water use was strongly regulated by environmental variables, primarily atmospheric variables such as air temperature and vapor pressure deficit. Overall, our results suggest that thinning can still promote an improved stand-level forest water balance during a wet year and thus may enhance forest resilience under projected increases in heat and aridity in the southwestern U.S.