Secondary tropical forests provide critical hydrological services through modulating transpiration and soil infiltration of precipitation. However, vegetation studies establishing direct mechanistic linkages between stand transpiration, soil moisture and streamflow are significantly lacking in tropical montane forests (TMFs) in Himalaya. We quantified the impact of diel and seasonal transpiration on catchment water balance and lean season streamflow in a broad-leaved evergreen secondary TMF in Eastern Himalaya. Stand transpiration (T) and streamflow (Q) were measured concurrently at one of the wettest (4500 mm yr−1) and highest elevation (2100 m) sites worldwide to date. The observed daily transpiration rates (1.29±0.99 mm d − 1) were double the reported values from TMFs in relatively drier Central Himalaya but at the lower bound of TMFs globally. Moderate precipitation pulses (10–25 mm volume) followed by clear skies significantly increased stand transpiration. The proportional contribution of evaporative losses (50–77%) and stand transpiration (2–13%) to catchment water balance increased with the progression of the wet season. The phase lags between T, soil moisture (S) and Q were confounded by significant pre-dawn sap flux movement and the presence of secondary diel peaks. Transpiration was a significant predictor of streamflow in the dry season and, to a lesser extent, in the wet season. Thus, changes in vegetation cover and precipitation patterns will likely impact hydrological services from the regenerating secondary TMFs and the regional water security in the Eastern Himalaya.