Leaves, except for those conducting CAM pathway, photosynthesize with simultaneous water loss. When a leaf dehydrates, by lack of supply or increasing atmospheric demand, photosynthesis and growth can decrease. Two anatomical characteristics, bulliform cells and bundle sheath cells, have separately been proposed to act as water-storage capacitors (hydrenchyma), yet their variation and physiological significance is still unclear. In this dissertation, we used anatomical images, produced in the lab and published data to quantify the proportion of different types of hydrenchyma in the grass subfamily Panicoideae. A significantly higher proportion of hydrenchyma cells, in both bulliform cells and bundle sheath cells, were observed in C4 species compared to C3 species, although at tribe level Paspaleae did not show such differences. Bulliform cell area also negatively correlated with bundle sheath cells in C4 species, especially in Andropogoneae tribe, suggesting a potential trade-off between these water-storage cells. The physiological adaptation of C4 photosynthesis results in anatomical alteration of leaves, which also affects the distribution of bulliform cells. The bulliform cells in C4 species tend to span across multiple minor veins. We then explored the closely-related C3 and C4 species with various proportion of hydrenchyma cells, examining their stomatal responses to two types of environmental perturbation, light and leaf-to-air vapor pressure deficit (VPDL). We found a relatively unresponsive stomata in wild grasses, contradicting with the long-standing dogma for speedy, responsive stomata due to their special dumbbell-shape. We also observed a smaller stomatal sensitivity to VPDL (m) in C4 species, in line with their higher proportion of hydrenchyma and lower relative water loss (RWL, %) during increasing VPDL. We validated this result using recombinant inbred lines (RILs) of Setaria viridis x S. italica, and also showed that m is positively correlated with RWL and negatively correlated with leaf saturated water content (SWC). Overall, our results propose the water-storage function of bulliform cells and bundle sheath cells, in addition to their established roles in rolling and involvement in the C4 carbon-concentrating mechanism, allow grasses to buffer sudden environmental changes.