Life history and photosynthetic type both affect the economics of leaf physiological function. Annual plants have lower tissue densities and resource use efficiencies than perennials, while C₄ photosynthesis, facilitated in grasses by specific changes in leaf anatomy, improves photosynthetic efficiency and water use efficiency, especially in hot climates. Does C₄ photosynthesis affect functional trait contrasts between annual and perennial species? We measured 26 traits and characterised niche descriptors for 42 grasses from subtropical China. Differences in the majority of traits were explained by life history. The ranges of annual species (particularly C₄ annuals) extended to regions with greater temperature seasonality and lower precipitation, and annuals had less negative turgor loss points, higher specific leaf areas, and lower water use efficiencies, stomatal conductances and leaf areas per stem area than perennials. Photosynthetic type largely affected leaf physiology as expected but interacted with life history in determining specific traits. Leaf hydraulic conductance was intermediate in perennials, highest in C₄-annuals, and lowest in C₃-annuals. Densities of stomata and stem vessels were similar across C₃-perennials and C₄ species, but stomatal densities were lower and stem vessel densities higher in C₃-annuals. Phylogenetic principal component analysis confirmed that in this subtropical environment life history is the predominant axis separating species, and annuals and perennials were more different within C₃ than C₄ grasses. The interplay between life history and photosynthetic type may be an overlooked factor in shaping the physiological ecology of grasses.