Abstract: FACE system was used to investigate the effect of wheat canopy energy balance and water use efficiency. Wheat canopy microclimate observations were conducted from March 19 to May 24, 2007 at elongation to maturity stage. The results show that daytime total canopy sensible heat flux of FACE is higher than the ambient heat flux, while a lower latent heat flux of FACE is observed throughout the observation period. The maximum difference in wheat canopy sensible and latent heat flux between FACE and the ambient varies by 12 ~ 78 W·m^-2 and -12 ~ -63 W·m^-2 respectively. Canopy stomatal conductance from P-M calculation agrees well with measured leaf stomatal conductance of wheat, indicating that microclimate data, latent and sensible heat flux estimated from residual energy balance are accurate. Total water-use by wheat throughout the observation period is 26 mm less under FACE than that under control condition. Reduced transpiration combined with increased total biomass results in a 19% increase in water use efficiency of wheat in FACE.