Water deficit stress is a major factor that affects crop productivity. Mannitol accumulation has been reported to increase tolerance in plants to water deficit stress through several mechanisms. In this study we evaluate the effect of mannitol accumulation in transgenic wheat that has a bacterial mtlD (mannitol-1-phosphate dehydrogenase) gene causing mannitol biosynthesis in either cytosol or chloroplasts. The objectives are to study to what extent mannitol protects expanded leaf tissue from oxidative stress and from injury to the photosynthetic carbon fixation. The possibility of osmoprotection is also explored. Five transgenic events were used in this study, TA2-110, TA2-118 (mannitol biosynthesis in cytosol), TA5-104, TA5-108 (mannitol biosynthesis in chloroplasts), and pAHC20(control with selectable marker). Net photosynthesis (A) and transpiration (E) were higher in the transgenic lines compared to control under both stressed and non stressed conditions. Similarly, leaf extracts from both the transgenic lines showed greater capacity to scavenge hydroxyl radicals than the control. The amount of mannitol accumulated in the leaf during stress was too low to contribute for osmotic adjustment.