As CO2 concentration in the atmosphere rises, there is a need for improved physical understanding of its impact on global plant transpiration. This knowledge gap poses a major hurdle in robustly projecting changes in the global hydrologic cycle. For this reason, here we review the different processes by which atmospheric CO2 concentration affects plant transpiration, the several uncertainties related to the complex physiological and radiative processes involved, and the knowledge gaps which need to be filled in order to improve predictions of plant transpiration. Although there is a high degree of certainty that rising CO2 will impact plant transpiration, the exact nature of this impact remains unclear due to complex interactions between CO2 and climate, and key aspects of plant morphology and physiology. The interplay between these factors has substantial consequences not only for future climate and global vegetation, but also for water availability needed for sustaining the productivity of terrestrial ecosystems. Future changes in global plant transpiration in response to enhanced CO2 are expected to be driven by water availability, atmospheric evaporative demand, plant physiological processes, emergent plant disturbances related to increasing temperatures, and the modification of plant physiology and coverage. Considering the universal sensitivity of natural and agricultural systems to terrestrial water availability we argue that reliable future projections of transpiration is an issue of the highest priority, which can only be achieved by integrating monitoring and modeling efforts to improve the representation of CO2 effects on plant transpiration in the next generation of earth system models. © 2022 The Authors