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Pot cultivation has the disadvantage of favoring extreme temperatures in the substrate, which can damage roots. To reduce this problem, the pot-in-pot (PIP) cultivation system has been developed. To determine the influence of PIP systems vs. above-ground pot (AGP) systems in native myrtle (Myrtus communis L.) production, an experimental field site was established where substrate temperature, soil matric potential (SMP), plant growth, water status, and gas exchange were measured. During the one-year experimental period, the PIP system showed mean monthly maximum substrate temperatures that were 6.3C to 8.6C lower than the AGP system, while mean monthly minimum temperatures were between 2C and 5C higher. Daily minimum SMP values were more negative in AGP, so the irrigation requirements were lower for the PIP system. In general, differences in gas exchange and water potential between both systems were very slight, which demonstrated the absence of drought conditions as a result of the high irrigation frequency. The AGP system produced greater plant height (16%) and shoot dry weight (11%) than PIP, while the PIP system increased root dry weight (14%), which was presumably responsible for the lower shoot/root index in the PIP cultivated plants. Such behavior is related to substrate temperature differences between both cultivation systems. The PIP system produced plants that were better able to survive two weeks without irrigation at the end of the experiment. These results suggest that the PIP system encourages greater root development and a higher SMP, which enables plants to better survive water stress conditions.