In this review we will discuss physiological traits of C3 cereals related to water use efficiency (WUE) in Mediterranean environments, from leaf (instantaneous WUE) to crop level (water productivity). Carbon isotopic discrimination (_13C) is the main approach used to estimate instantaneous WUE in C3 plants, and the negative correlation between both parameters has been confirmed by several works. However, in Mediterranean irrigated conditions, a positive correlation between _13C and grain yield is found in barley and wheat, whereas in stored-water crops, lower _13C (i.e. higher WUE) is associated with higher grain yield, particularly in more stressful conditions. These apparent inconsistencies are discussed. One physiological trait that has received minor attention is the role of the ear photosynthesis to improve instantaneous WUE. Several works carried out by our group have reported that ears of barley and durum wheat have a higher instantaneous WUE than the flag leaf, both in well watered as in drought conditions. At the crop level, decreasing soil evaporation is a crucial factor to ameliorate the WUE and a fast initial growth seems to be a relevant trait. A positive correlation between higher early vigour and grain yield was found in some studies. However, early vigour may not confer an advantage in other environments, and this issue is discussed. Finally, because the water losses by the epidermal cuticle may be important in droughted plants, we will briefly comment on possible future research directions in this field, as a way to improve WUE in cereals.