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Physiological responses of the halophyte, Atriplex subspicata Nutt. Rydb., to defoliation injury were evaluated through a series of experiments measuring plant gas exchange, fluorometry, and enzyme activity. Leaves exposed to simulated insect herbivory exhibited reductions in photosynthesis, stomatal conductance, and transpiration. Carboxylation efficiency, maximum assimilation, and CO2 compensation were also negatively associated with mechanical leaf injury. Insect injury by a herbivore generalist, Spilosoma virginica, also reduced photosynthesis and carboxylation efficiency within the saturated spectrum of A/Ci response curves. Initially, declines in photosynthesis occurred because of transient stomatal limitations. However, after time, mesophyll limitations impaired photosynthesis and the plant’s ability to compensate for injury. Fluorescence data and light assimilation responses indicated that defoliation did not play a role in limiting light reactions of photosynthesis. Enzyme analyses showed increased peroxidase activity with insect injury, suggesting the need for future characterization of oxidative enzymes, which have been associated with traits of resistance. Overall, we found a salt-tolerant plant to be susceptible to insect herbivory through a reduction in the efficiency of the plant to allocate energy resources. If salt tolerance comes at the cost of susceptibility to biotic interference, natural occurring halophytes or plants with transgenic salt tolerance may be at risk for heightened deleterious response to insect herbivory.