This paper is concerned with climate change in the region of the Canary Islands and the potential implications for the laurel forests of Tenerife. Frequent orographic cloud formation during the dry season is of vital importance to the altitudinal distribution of the laurel forests, because it maintains a semi-humid environment in the otherwise semi-arid climate of the Canary Islands. The distinctive environmental conditions in conjunction with the location of the Canary Islands on the Northern poleward edge of the Hadley Circulation make these ecosystems potentially highly sensitive to regional changes in climatic conditions. To explore this sensitivity, we first quantify observed trends in humidity and temperature across an altitudinal transect at the base of the Anaga peninsular, and second, analyse the results of three GCM experiments (CGCM1, ECHAM4 and CSIRO) to develop alternative climate change scenarios, and third, use these data to assess likely shifts in the elevational distribution of the laurel forest climate envelope. We report a significant increase in relative humidity and decreases in the diurnal temperature range on Tenerife at altitudes below the trade wind inversion within the last 30 years during the dry season, which suggests an increased occurrence of low-level clouds. There is also partial evidence for a drying trend across the trade wind inversion, which may be linked to an increased subsidence. Overall, the models suggest a downward shift of the area climatically suitable for laurel forests, which may be driven by changes in temperature and moisture supply in the region as well as by larger-scale changes in the atmospheric circulation. Our findings contrast with previously published findings for a tropical montane cloud region, which predict an upward shift of the cloud base. This suggests, following the assumptions inherent in the models applied, that the ecological consequences of climate change for cloud forests may be linked to their relative location in the Hadley Circulation.