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Background and Aims Organisms often balance among reproduction, growth and survival. When these processes are in competition, selection may act to drive functional dimorphism. Unlike seed plants, ferns use their foliar surfaces for reproduction and carbon fixation. Across species, ferns exhibit a gradient of fertile–sterile dimorphy: from the production of highly reduced fertile fronds (holodimorphic) to no reduction (monomorphic) in laminar area between fronds. Here the physiological impacts of fertile–sterile dimorphy were investigated through a series of observational and experimental field manipulations.Methods Temporal shifts in photosynthesis, respiration and percent nitrogen (%N) were examined to evaluate changes in physiological behaviour over the growing season of two species of fern of similar ecological niche, yet of different degrees of fertile–sterile frond dimorphism: Osmundastrum cinnamomeum (holodimorphic) and Osmunda regalis (hemidimorphic). These data are combined with experimental fertile and sterile frond removal to evaluate relative costs of reproduction in both species. Finally, labelled δ13C gas was used to follow carbon allocation across the growing season.Key Results The data demonstrate that reproductive structures in the holodimorphic O. cinnamomeum come at more significant carbon and nitrogen costs relative to those in the hemidimorphic O. regalis. Excision experiments demonstrate that investment in fertile fronds strongly impacted future allocation to reproduction in the holodimorphic species but had a lesser effect on the hemidimorphic species. The labelling experiments showed that fixed carbon is translocated to the rhizomes only, but at different times in the two species. Investment in underground resources probably allows these plants to manage the costs of reproduction associated with increased dimorphy.Conclusions Fertile–sterile dimorphy has evolved multiple times in ferns in spite of the apparent physiological costs associated with a reduction in photosynthetically active tissues. These apparent costs may be offset by an increase in potential spore dispersal distance and/or increased spore production. The phenomenon may further influence species ecology as dimorphic taxa often occupy resource-rich environments.