Inducible C4-like photosynthetic metabolism in Hydrilla verticillata leaf tissue elicits variability in photosynthetic phenotype, expressed as CO2 compensation point. We conducted a field and laboratory study to investigate the ecological and adaptive significance of this physiological phenomenon. Spatial horizontal environmental heterogeneity was observed within clonal populations of H. verticillata in Florida, USA. Measured at midday, the edge habitat at the expanding periphery of the clone exhibited a dissolved inorganic carbon (DIC) concentration of 0.7 mmol/L, pH 7.1, a dissolved oxygen (DO) level of 0.13 mmol/L, and biomass of 0.2 kg/m2. The mat habitat, located 200 cm towards the interior of the surface mat, exhibited DIC 0.1 mmol/L, pH 10.2, DO 0.48 mmol/L, and biomass 0.8 kg/m2. DIC depletion and DO supersaturation characterized the mat habitat for most of the day and much of the growing season. Furthermore, net photosynthesis, daily carbon gain, and relative growth rate (RGR) of H. verticillata were reduced 80% by mat conditions compared to edge conditions. Compensation points of H. verticillata were positively correlated with CO2 and bicarbonate concentration, and negatively correlated with pH, DO, and biomass. Low and high compensation point photosynthetic phenotypes were associated with the mat and edge habitats, respectively. Photosynthetic phenotype of H. verticillata appears to acclimate to environmental heterogeneity within a clone in the field. Net photosynthesis and daily carbon gain of low comp. point phenotype H. verticillata was 128% and 40% greater than the high comp. point phenotype when measured in the mat habitat, but was 21% lower than the high comp. point photosynthetic phenotype when measured in the edge habitat under low quantum flux. Laboratory experiments showed a negative curvilinear relationship between the comp. point of H. verticillata and plant density. The data demonstrate that plasticity in photosynthetic phenotype of H. verticillata is a density-dependent, physiological response that optimizes carbon gain within a stressful heterogeneous environment. Evolution of facultative C4-like photosynthetic metabolism in H. verticillata may have been an adaptation to the constraints imposed upon cabon gain by DIC and quantum flux limitation in the mat habitat.